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 that 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 declined for the fourth month in a row in July, reaching its lowest level since August 2020. Growth in China's manufacturing sector fell sharply in July, as reflected by the plunge in the official manufacturing PMI. In July, China's official manufacturing PMI dropped further to 50.4, the lowest value since February 2020. Profit margins of manufacturers continued to be squeezed, as reflected by the divergence between the growth of input and output prices.

Automobile production declined by 15.36% y/y in July. China’s credit expansion also slowed down in July. China’s total social financing increased by RMB 1.06tn in July, the lowest level since February 2020. Growth of money supply decelerated, increasing by 8.32% y/y in July from 8.56% in the previous month. The growth rate of financial institution deposits followed a similar pattern, decelerating to 8.64% y/y in July. The recovery in the real estate sector continued to cool down, as floor space sold of commodity buildings in the period January-July 2021 increased by 21.54% y/y compared to 27.71% y/y growth in the period January-June 2021.

The smoothed CEIC Leading Indicator dropped further to 105.11 in July, marking the fifth month of decline and suggesting that the Chinese economy is under pressure. Recent COVID-19 outbreaks further cast a shadow over the economic performance in the rest of Q3.

Keep informed each month on the predicted turning points of the economic cycle for key markets with our free, proprietary CEIC Leading Indicator. Learn more and register here.