February 2021 CLIEAC indicates economic expansion in China
This report presents the February 2021 update on the Commodity Leading Index Economic Activity China (CLIEAC, see Appendix for index description).
Expansion As indicated by our CLIEAC, the Chinese economy remained in expansion mode. Manufacturing conditions worsened, as reflected by the PMI figures (Caixin/Markit PMI down from 53.0 to 51.5; NBSC PMI down from 51.9 to 51.3), due to lockdown measures imposed over a recent Coronavirus resurgence. There is no trade data released for January to remove the seasonal influence of the Lunar New Year holiday. RMB depreciated against the basket of currencies of main trade partners over the month. Correspondingly, as shown in the Swirlogram, the CLIEAC places overall economic activity in an Expansionary mode. The monthly index average moved by 0.05 over the month to 0.68 (one year range is -1.31 to 0.7). The current quarter average of 0.64 is above the previous quarter average of 0.56 and above the yearly average of -0.11.
CLIEAC Components Over the previous period 2 components of the CLIEAC increased, 8 remained within the momentum range of +/-0.3 standard deviations (s.d) and 4 decreased. More than half the components (11 out of 14) remain above their long-run average of zero. On the positive side, Fiscal Revenue experienced the largest increase of +2.05 s.d, followed by Foreign Direct Investment. On the negative side, Caixin/Markit PMI exhibited the largest drop of -0.61 s.d, followed by Fixed Asset Investment Manufacturing and Fixed Asset Investment Real Estate.
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Source: Four Elements Capital