October data may show early sign of cyclical bottom

November 2019 - October Data Release

Growth might be stabilizing, according to The Conference Board Leading Economic Index® (LEI) for China. It will take a couple more months to confirm whether this is a turning point, as LEI components can be volatile. Fixed asset investment (FAI) growth in real estate and infrastructure development slowed in October. Manufacturing investment growth rebounded slightly, but private sector investment continued to weaken. Strong growth in corporate loans, now persistent for three months, may signal near-term recovery in manufacturing and FAI growth. Slowing income growth, rising debt repayment burdens, high consumer inflation, and sluggish employment growth are all weighing on the outlook for consumption growth. China’s export performance is improving on paper, now that the high base of last year’s front-loading of export orders is diminishing. Moving forward, however, global growth and outcomes in the US-China trade war will dictate future performance.