April 2021 CLIEAC indicates economic expansion in China
Expansion As indicated by our CLIEAC, the Chinese economy remained in expansion mode. Manufacturing conditions were stable, as reflected by the PMI figures (Caixin/Markit PMI down from 50.9 to 50.6; NBSC PMI up from 50.6 to 51.9), although the large manufacturers captured in the NBSC survey resumed production after the Lunar New Year lull. March trade data saw exports rise by 30.6%, as global demand rose amid progress in vaccination campaigns, while imports rose by 38.1%, as domestic demand recovered. RMB depreciated against the basket of currencies of main trade partners over the month.
Note: The values of the previous quarters reflect the index average for the entire quarter. The values of the current quarter reflect the index average for the current quarter up to the date of the report release.
Correspondingly, as shown in the Swirlogram, the CLIEAC places overall economic activity in an Expansionary mode. The monthly index average moved by 0.26 over the month to 1.38 (one year range is -1.27 to 1.38). The current quarter average of 1.38 is above the previous quarter average of 0.82 and above the yearly average of 0.32.
CLIEAC Components Over the previous period 5 components of the CLIEAC increased, 6 remained within the momentum range of +/-0.3 standard deviations (s.d) and 3 decreased. More than half the components (10 out of 14) remain above their long-run average of zero.
On the positive side, Major Coastal Ports Volume experienced the largest increase of +2.37 s.d, followed by Fiscal Revenue and Railway Freight Traffic. On the negative side, Fixed Asset Investment Real Estate exhibited the largest drop of -4.73 s.d, followed by Vehicle Sales and Building Sales.
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Appendix: Index Composition
The Commodity Leading Index Economic Activity China (CLIEAC) is a composite index that provides a measure of overall economic activity in China. The index consists of a equally weighted basket of components which reflect fundamental data related to economic activity. Each index component is Chinese New Year calendar effect-, trend- and seasonally adjusted, smoothed, normalized and updated in the index as new data becomes available. The rolling standard score (Z-score) approach is applied to normalize each component before aggregation. As such, a reading above zero indicates expansion and below zero contraction of economic activity relative to the long-run average. Upwards and downwards movements of the index indicate improving and deteriorating economic activity respectively. The CLIEAC is composed of 14 components covering supply- and demand- side factors across five categories.
- Production: Electricity Production, Fiscal Revenue, Caixin/Markit and NBSC Purchasing Manager Index
- Transportation: Port Freight Traffic, Railway Freight Traffic
- Trade: Total Imports, Total Exports
- Consumption: Retail Sales, Real Estate Sales, Vehicle Sales
- Investments: Fixed Assets Investment Real Estate and Manufacturing, Foreign Direct Investments