Asia Briefing: Sentiment boosted by upbeat assessment on economic growth in China
Headline figure hides decidely mixed data on employment, credit availability and input prices
Signs that Chinese economic growth may not be as moribund as earlier in the year continue to gather, but the picture remains mixed as key elements of the economy continue to lag.
The MNI China Business Indicator, a monthly poll of Chinese business executives at companies listed on either the Shanghai or Shenzhen stock exchanges, shows business sentiment has reached its highest point since February.
The indicator rose to 58.0 in August from 53.4 in July, the first gain in three months.
“The government’s recent measures to fine-tune growth possibly fed through to sentiment this month, and a speeding-up of approvals for projects may already be feeding through to new orders, which rose to the highest since January 2012. Companies also reported a significant improvement in their financial position,” MNI said in a statement.
However, it’s not all good news. Production fell in August to the lowest level since March, while productive capacity hit the lowest on record. The employment indicator fell in August and has now been below the 50 breakeven level for five months. Credit availability also fell – to the lowest level since October 2011 – following moves to rein in the shadow banking sector.
Input prices rose sharply in August while prices charged by companies fell to the lowest since September 2012.
“We saw some green shoots in the July data and these have been built on in August, with a fifth consecutive monthly rise in new orders and a pick-up in overall confidence, possibly as a result of the government’s recent measures,” said MNI chief economist Philip Uglow.
However, Lombard Street Research believes real GDP is way behind the government target of 7.5 per cent. Its GDP estimates show quarterly annualised growth was 2.6 per cent on average in the first half of this year, with Q4 seeing a contraction and real annual GDP growth falling to 5.6 per cent.