China resumption shows divergent signs with global uncertainty

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China’s economic recovery showed divergent signs, although it remained broadly stable in October, with small businesses being more cautious and the housing market weaker, despite the increase in car sales.

The aggregate index that combines eight initial indicators monitored by Bloomberg was unchanged from the previous month.

Small business confidence declined in October, with a general slowdown in sub-indices, according to Standard Chartered, which surveys more than 500 smaller companies monthly. As the world’s largest exporter, China is exposed to the prospect of deterioration in the rest of the world amid an increase in cases of coronavirus, which threatens the domestic recovery that still remains solid.

“The pace of recovery slowed in October,” Standard Chartered economists, Shen Lan and Ding Shuang said in a report. “The ‘expectations’ sub-index dropped to 52.6 in October from an average of 54.7 in the third quarter, indicating a more cautious business outlook until the end of the year.”

Property sales, which have remained relatively resilient despite the economic slowdown this year, have started to cool as authorities tighten control over financing for developers.

South Korean exports, a thermometer of global trade, also deteriorated in the first 20 days of October, although the data was affected by fewer working days in the month. The deflation of factory prices must have been accentuated in the month, weighing on the profit growth of industrial companies that face a faster increase in input costs than in production prices.

At the same time, vehicle sales improved, which showed solid growth in line with the general upward trend observed recently in consumer spending.

The acceleration in consumption may help boost production in the service sector, which has outpaced manufacturing activity in smaller companies for the first time since the Covid-19 shock, according to Standard Chartered.

Purchasing managers’ indices, which will be released in the coming days, will also give an idea of ​​the recovery. The official manufacturing index is expected to decline slightly in October, probably because of the closings during China’s Golden Week holiday this year, and not because of a weaker recovery, according to Chang Shu of Bloomberg Economics.

Beginning in July, Bloomberg changed some of the components for the preliminary reading of China’s economy, adding sales of real estate in the four largest cities, weekly car sales and steel reinforcement stocks, while removing iron ore prices, confidence sales and inventory managers related to the real estate sector.

Source: Exame

China’s economic recovery showed divergent signs, although it remained broadly stable in October, with small businesses being more cautious and the housing market weaker, despite the increase in car sales.

The aggregate index that combines eight initial indicators monitored by Bloomberg was unchanged from the previous month.

Small business confidence declined in October, with a general slowdown in sub-indices, according to Standard Chartered, which surveys more than 500 smaller companies monthly. As the world’s largest exporter, China is exposed to the prospect of deterioration in the rest of the world amid an increase in cases of coronavirus, which threatens the domestic recovery that still remains solid.

“The pace of recovery slowed in October,” Standard Chartered economists, Shen Lan and Ding Shuang said in a report. “The ‘expectations’ sub-index dropped to 52.6 in October from an average of 54.7 in the third quarter, indicating a more cautious business outlook until the end of the year.”

Property sales, which have remained relatively resilient despite the economic slowdown this year, have started to cool as authorities tighten control over financing for developers.

South Korean exports, a thermometer of global trade, also deteriorated in the first 20 days of October, although the data was affected by fewer working days in the month. The deflation of factory prices must have been accentuated in the month, weighing on the profit growth of industrial companies that face a faster increase in input costs than in production prices.

At the same time, vehicle sales improved, which showed solid growth in line with the general upward trend observed recently in consumer spending.

The acceleration in consumption may help boost production in the service sector, which has outpaced manufacturing activity in smaller companies for the first time since the Covid-19 shock, according to Standard Chartered.

Purchasing managers’ indices, which will be released in the coming days, will also give an idea of ​​the recovery. The official manufacturing index is expected to decline slightly in October, probably because of the closings during China’s Golden Week holiday this year, and not because of a weaker recovery, according to Chang Shu of Bloomberg Economics.

Beginning in July, Bloomberg changed some of the components for the preliminary reading of China’s economy, adding sales of real estate in the four largest cities, weekly car sales and steel reinforcement stocks, while removing iron ore prices, confidence sales and inventory managers related to the real estate sector.

Source: Exame

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