The CEIC Leading Indicator is a proprietary dataset designed by CEIC Insights to precede the development of major macroeconomic indicators and predict the turning points of the economic cycle for key markets. It is a composite leading indicator which is calculated by aggregating and weighting selected leading indicators covering various important sectors of the economy, such as financial markets, the monetary sector, labour market, trade and industry. It is developed through a proprietary CEIC methodology and employs data from the CEIC database. The CEIC Leading Indicator currently covers eight regions – Brazil, China, India, Indonesia, Russia, the Euro Area, Japan and the United States.
The CEIC Leading Indicator for China closed Q1 2021 with a strong performance in March. The non-smoothed indicator increased to 117.5 in March from 116.4 in the previous month. While this value is not recorded high, the solid trend suggests that the overall performance might be the strongest recorded since 1997, as the previous peaks were likely outliers.
The development of the indicator was backed by positive signals from the manufacturing sector. Manufacturing PMI increased on a monthly basis for the first time since November 2020, jumping to 51.9% in March from 50.6% in February 2021. The automobile sector continues its recovery and car production increased by 73.1% y/y in March 2021, although the low base effect from the COVID-ridden previous year should be taken into account. The situation in the real estate sector is also improving, as the floor space sold in the period between January and March 2021 increased by 63.8% compared to the same period of 2020. The monetary policy continues to be accommodative, with money supply increasing by 9.4% y/y in March, although there is a slight deceleration from the 10.1% y/y growth in the previous month.
The smoothed CEIC Leading Indicator rose to 117.2 in March 2021 and is currently at its highest level on record. The continuous strong performance of the smoothed indicator since March 2020 foreshadowed the economic recovery of China in the aftermath of the COVID-19 crisis and is in line with the latest GDP figures, which revealed a Q1 2021 growth of 18.3% y/y.
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