UBS big data estimate of Chinese economy: slight softening in Q2
Mixed growth in May, trajectory in line with April figures
A report from UBS Evidence Lab Macro (ELM) released on Thursday indicates that China’s Q2 softness persists, as a pick up in industrial production and consumption ex-autos was offset by a slowdown in real estate and auto sales.
The report, independent from UBS’ China economics team, leverages real-time big data to assess economic activity. The research notes a discrepancy between ELM growth figures and official data, and suggests that stronger property sales in second-tier cities may have accounted for the higher growth figures in official data. The ELM index also diverges negatively with the Li Keqiang index as seen in the above chart.
Key ELM finding for May:
- “Industrial production is likely to be better, with our estimate in May at 6.4% above our March estimate of 6.3%. We are observing strong export growth, though some of the under indicators (e.g., business spending and business surveys we track) are showing some softness.
- Our point of sale data suggests that Y/Y growth for consumption ex-auto has got better May relative to April. We see many of the categories performing better (e.g. restaurants, supermarkets, apparel, department stores, travel).
- Our data on manufacturers’ sales suggests that automotive sales growth remains soft, similar to last month.
- Property sales in larger cities remain soft, similar to last month. Our understanding is that the lower tier cities provided bulk of the growth in property sales over the last few months, and that could have led to the disconnect between our growth figures and official figures recently.
- Property investment growth is showing some signs of weakening, after multiple months of growth. Our property investment index is based upon starts data over the previous several months, and the softening starts growth over the course of 2016 is likely to translate in lower property investment growth over the coming months.”