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China: Leading Economic Indicator Rises

December 20th, 2012
in econ_news, syndication

China-dragon1Econintersect: The Conference Board's LEI (Leading Economic Indicator) advanced again in November, rising by 1.1%.  This followed a 1.6% advance in October and 0.2% increase in September.  Over the past six months the Chinese LEI has had a strong increse of 5.8%.

The CEI (Coincident Economic Indicator) also rose.  The November increase of 0.9% followed a 1.0% advance in October and small rises in August and September.  Over the past six months the CEI has increased by 4.4%.

Follow up:

china-conference-board-2012-December

Following is the December 20 2012 press release from the Conference Board:

The Conference Board Leading Economic Index® (LEI) for China increased 1.1 percent, and The Conference Board Coincident Economic Index® (CEI) increased 0.9 percent in November.

The Conference Board LEI for China increased again in November. Floor space started and total loans issued by financial institutions made the largest positive contributions to the index. Between May and November 2012, the leading economic index increased by 5.8 percent (about an 11.9 percent annual rate), slightly down from the increase of 6.5 percent (about a 13.5 percent annual rate) for the previous six months. Nevertheless, the strengths among the leading indicators have remained more widespread than the weaknesses in the last six months.

The Conference Board CEI for China, a measure of current economic activity, also increased in November, with all its components making positive contributions. With this month’s gain, the coincident economic index increased by 4.4 percent (about a 9.0 percent annual rate) between May and November 2012, up from the increase of 2.4 percent (about a 4.8 percent annual rate) for the previous six months. At the same time, according to the National Bureau of Statistics of China, real GDP increased by 7.4 percent in the third quarter of 2012 (year over year), slightly down from the increase of 7.6 percent (year over year) in the second quarter.

The LEI for China increased again in November, and although its six-month growth rate is up slightly from the third quarter, it is still lower than in the first half of 2012. Meanwhile, the steady upward trend in the CEI continued through November, and its six-month growth rate has improved. Taken together, the composite indexes suggest that the economy may pick up in the short term, but the acceleration is likely to be modest.

LEADING INDICATORS. Five of the six components that make up The Conference Board LEI for China increased in November. The positive contributors to the index – in order from the largest positive contributor to the smallest – include total floor space started, total loans issued by financial institutions, the PMI new export orders index, the 5000 industry enterprises diffusion index: raw materials supply index*, and the consumer expectations index. The (inverted) PMI supplier delivery index declined in November.

With the increase of 1.1 percent in November, The Conference Board LEI for China now stands at 248.5 (2004=100). Based on revised data, this index increased 1.6 percent in October and increased 0.2 percent in September. During the six-month span through November, The Conference Board LEI for China increased 5.8 percent, and five of the six components advanced (diffusion index, six-month span equals 83.3 percent).

COINCIDENT INDICATORS. All five components that make up The Conference Board CEI for China increased in November. The positive contributors to the index – in order from the largest positive contributor to the smallest – include volume of passenger traffic*, retail sales of consumer goods, electricity production, value-added industrial production, and manufacturing employment*.
With the increase of 0.9 percent in November, The Conference Board CEI for China now stands at 228.5 (2004=100). Based on revised data, this index increased 1.0 percent in October and increased 0.5 percent in September. During the six-month span through November, The Conference Board CEI for China increased 4.4 percent, and all five components advanced (diffusion index, six-month span equals 100.0 percent).

John Lounsbury

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