Promising trends in China’s latest data

China announced its stimulus package in September, as the third quarter was coming to an end. With official data now released for those three months, we can take a snapshot of the economy in charts: headline GDP was basically flat, but there were bright spots in services, consumption, investment and production.

Real GDP (based on constant prices) rose at a 4.6% year-on-year pace in the quarter, as our first chart shows -- slowing from 5.3% and 4.7% in Q1 and Q2, respectively. Our second chart compares overall GDP growth with different sectors, showing the relative strength of primary, secondary and tertiary industry. The tertiary sector, i.e. services, accelerated to a 4.8% growth pace in Q3 as the other two sectors slowed.

To reach China's annual economic growth target of 5% for the year, GDP would need to expand by 5.4% year-on-year in the fourth quarter.

Our third chart breaks out trends for the month of September, showing how key metrics improved. The year-on-year growth rate for retail sales of consumer goods accelerated by 1.1 percentage points to 3.2%. Fixed asset investment grew by 1.8 percentage points to 3.3%; and production, i.e. the growth rate of value added by industry, increased by 0.9 percentage points to 5.4%.

Our final chart compares the purchasing managers' index (PMI) for manufacturing and non-manufacturing sectors to CEIC's proprietary leading indicator, which is designed to anticipate the peaks and troughs of the business cycle.

Both PMI measures are near neutral, though manufacturing PMI improved in September. CEIC's leading indicator has seen a steeper pickup of late, reaching the "neutral" 100 value, which represents the long-term economic trend.

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