Pending China Economic Data
Economic globalization - a world with transparent boundaries! Money managers must not only understand the economic conditions that exist here in the United States but, more importantly, throughout the world. As I am sure most have already heard - "When the U.S. catches a cold, the world gets pneumonia!" We need to alter that statement. I suggest - "When the U.S. catches a cold, the developing world feeds it chicken soup!"
During the second week of August, China import data stalled the July rally in U.S. equities. The data, in fact, was the catalyst for further selling pressure throughout the remainder of the month.
Between Friday, September 10 and Thursday, September 16, a series of Chinese economic data points that investors will need to pay attention to will be released. Unfortunately, in some the data is not "date certain;" it is released over a seven day period. Here is what to watch for:
1. Trade Data (Exports and Imports) - % change YOY from July to August
To be released on September 10 - I view this as the most important data point. Last month's import figures were disappointing as imports of oil, copper and motor vehicles fell significantly. The headline consensus estimate for this month's import growth ranges from 24% to 28%. Last month was 22.7%; the estimate was for 30%. This report provides the most insight toward domestic demand and telegraphing China GDP.
Exports are expected to soften from last month's 38.1% growth to a consensus estimate range of 34% to 38%.
2. CPI & PPI
To be released on September 13 - estimates for PPI expect a weakening from last month's 4.8% to a range of 4.5% to 4.8%. Estimates for CPI are for a modest increase from 3.3% to a range of 3.3% to 3.5%. There was clearly an up-tick in food prices in the developing world which should contribute to a higher CPI figure.
3. Retail Sales
To be released on September 12 - estimates are for a modest increase from a previous figure of 17.9% to a range of 18.0% to 18.2%.
4. Industrial Production
To be released on September 12 - once again an important figure in terms of estimating China's GDP. Last month, Industrial Production rose 13.4%. Based on last week's better than expected China PMI release, consensus estimates for Industrial Production have risen from a range of 12.8%-13.0% to 13%-13.4%. In any case, the consensus expects this figure to weaken. If it does, the chatter about China GDP falling short of 10% may resume.
5. Fixed Assets Investment
To be released on September 12 - this figure best provides an understanding for infrastructure spending. Last month's figure was 24.9%. Consensus estimates for this month range from 24.6% to 24.9%.
6. Loan Growth
To be released anywhere from September 10 to 15 - last month, lending slowed, as new loans were 532.8 billion yuan. Again this month, a slowdown in lending is expected to around 500 billion yuan.