China Growth Tracker: PMIs Confirm Weakening in Our Reopening Index

We published a note on how to track Chinese growth in real time using financial and commodity market prices. In these weekly reports, we update the indicators to help us track growth.

Summary

• Excluding flights from our high-frequency China reopening index, activity fell through April, as confirmed by PMIs for the period.
• In line with this, our market data-based China growth tracker has weakened, despite a positive preliminary update to our economic data-based China growth tracker through April (Charts 2 and 3).

PMI Confirms Weakening Reopening Index Developments

The April PMI confirmed recent developments in our high-frequency China reopening index excluding flights which had decreased throughout the month as all components other than box office revenues proved weaker.

Looking forward, the index may find support as millions of Chinese travellers headed for major cities and tourist hotspots over the Labour Day break. More than 159 million trips were made in the first three days, up 162% from last year, according to the Transport Ministry, while at least 120 million are expected to trip by train over the period, according to national operator China Railway Group.

Market-based measures of China’s growth continue to worsen, in line with weaker outturns in our reopening index (excluding flights; Table 1). Positive copper contributions were outdone by larger negative ones from iron ore, oil, Baltic Dry Index and 10Y yields.

Our economic data-based China growth tracker has nudged higher through April (Table 2).

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

Ben Ford is Researcher at Macro Hive. Ben studied BSc Financial Mathematics at Cardiff University and MSc Finance at Cass Business School, his dissertations were on the tails of GARCH volatility models, and foreign exchange investment strategies during crises, respectively.

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