China’s economic slowdown continues in November, according to Bloomberg Economics’ gauge, the earliest-available indicators in China’s economic performance. The tensions with the US eased after both sides announced talks toward a “phase one” deal in October. However, trade flows in Asia, indicated by South Korean exports, fell nearly 10% on November 1-20, reflecting weakness in high-technology trade in Asia.
China’s factory goods prices fall at a faster pace in November, indicating weak domestic demand. The continued weakness in domestic demand stokes concerns on falling corporate profits both at home and overseas.
Sales managers at Chinese companies expressed worries about the worst conditions on record. The headline index and sub-indexes for manufacturing were all below 50, indicating a contraction. Meanwhile, Business confidence fell to a 14-month low. Indicators in the manufacturing sector were also lower compared to September. The service industry also suffered from the same malaise in November, a survey from Standard Chartered showed.
However, there were some upbeat parts of China’s economy. StanChart survey found that export-oriented companies were more optimistic as external demand rebounded. The optimistic domestic demand outlook for iron ore drove prices soaring to their highest since May. Iron ore demand indicates growth in construction.
Bloomberg Economics’ gauge aggregates early indicators of business and financial markets. The indicators include CSI 300 index of A-share stocks listed in Shenzhen or Shanghai, real-estate constituent of CSI 300 index, iron ore spot price for shipment to Qingdao port, refined copper spot price in Shanghai market, South Korean exports in the first 20 days of every month, Bloomberg’s inflation tracker, StanChart survey on SME confidence, and World Economics survey on sales manager sentiment.
