China LEI Increases: "Economic expansion should continue short-term"

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The Conference Board: China Monthly Leading Economic Index

China Monthly LEI & CEI

Current Leading Index: 257.5
Current Coincident Index: 234.9
Post-Recession LEI High: 257.5 (February 2013)
Post-Recession CEI High: 234.9 (February 2013)



Says Andrew Polk, resident economist at The Conference Board China Center in Beijing: “The Leading Economic Index for China maintained its pace in February, a sign that the current economic expansion should continue in the near-term. Current economic conditions strengthened considerably compared to previous months. However, the six-month average growth rate of the LEI has weakened. The drivers of growth remain fragile, and recent improvements in consumer expectations are not likely sustainable in the face of rising inflation. Investment activity, which is also underpinning the current growth rebound, is heavily credit dependent and could be affected by changes in monetary policy in the wake of the leadership transition.”

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China Manufacturing Slows: "Pace of recovery is mild"

China Manufacturing PMI by Month
Current Index: 50.4
Chart High: 54.5 (January 2011)
Chart Low: 47.6 (August 2012)
The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "The final February HSBC manufacturing PMI suggests a slower pace of expansion. But China's recovery continues on improving domestic demand conditions and the labour market. The pace of ongoing recovery is mild, implying no need for the PBoC to tighten policy any time soon."

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China Manufacturing Expansion Slows: "Gradual Recovery"

China Manufacturing PMI by Month
Current Index: 50.4 (Flash Estimate)
Chart High: 54.5 (January 2011)
Chart Low: 47.6 (August 2012)
The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "The Chinese economy is still on track for a gradual recovery. Despite the moderation of February’s flash PMI, the index recorded the fourth consecutive reading above the 50 critical line. The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth."

China Manufacturing PMI Moving Averages
3-Months: 51.4
6-Months: 50.4
12-Months: 49.4
The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



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China LEI Increases: "Economic rebound continues to look modest"

The Conference Board: China Monthly Leading Economic Index

China Monthly LEI

Current Leading Index: 253.4
Current Coincident Index: 233.7
Post-Recession LEI High: 253.4 (January 2013)
Post-Recession CEI High: 233.7 (January 2013)



Says Andrew Polk, resident economist at The Conference Board China Center in Beijing: “January’s acceleration in the LEI was driven primarily by consumer expectations and estimated real estate activity, both of which were likely positively affected by the Chinese New Year holiday. Credit extension also contributed to the increase in the LEI. Despite the seasonal uptick in some components, recent gains in the LEI have become less widespread and the current rebound in economic activity continues to look modest.”

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Jim Rogers: The Rise of China and the Asian Century

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Jim Rogers

Jim Rogers on China's Ascension, Wall Street's Downfall, and Obama's Failures

Jim Rogers, CEO of Rogers Holdings and author of "Street Smarts," tells Reuters Consumer News Editor Chrystia Freeland that China will ride out internal issues to lead the world. Rogers also says that Wall Street's ways will erode its stature and President Obama's ideas for reviving the economy will fail.

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Street Smarts: Adventures on the Road and in the Markets by Jim Rogers

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Chinese Economy and Employment Expands

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China Manufacturing PMI, Services NMI, and Composite PMI by Month
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Hongbin Qu, Chief Economist, China Co-Head of Asian Economic Research at HSBC, said: "Services activities resumed faster expansion on rising new business flows, along with the recovery of manufacturing growth. Still solid job gains plus higher business expectations bode well for further improvement of services sectors’ growth. Following the growth bottoming out in 4Q 2012, China’s growth recovery is now on a firmer footing."

Chinese Employment Expands "Staff numbers increased at a marked pace in the service sector during January, despite the rate of job creation having slowed from the previous month. Employment levels in the manufacturing sector also rose, albeit slightly. At the composite level, staffing levels increased modestly and at the fastest rate since May 2011."

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Baidu Earnings Slower

● Baidu Planet ●

Baidu reported QE December 2012 financial results on February 4

Baidu Earnings Disappoint: Revenues Up, Margins Down

Baidu (BIDU) reported record revenues of RMB6.335 ($1.017 billion) for the quarter ending December 2012, but GAAP ($1.28) and non-GAAP ($1.31) earnings per share did not keep pace. Though both were the second best ever, the gross profit margin (68.5%) fell to an 11-quarter low preventing a push higher for earnings per share to a record. Lower margins offset higher revenues and resulted in lower income. This negatively impacted earnings per share. Read more and see charts at Seeking Alpha.

● Baidu Planet ●

China Manufacturing Rises: "Gaining further steam"

The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, increased +0.8 to 52.3 in January 2013, the highest since January 2011 (54.5).

China Manufacturing PMI by Month Manufacturing began expanding, an Index reading of greater than 50, in November 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: “A higher reading of January final manufacturing PMI implies that China’s manufacturing activity is gaining further steam on the back of improving domestic conditions. We see increasing signals of a sustained growth recovery in the coming months: the steady investment growth led by infrastructure projects, the improving labour market conditions boosting consumer spending, and the ongoing re-stocking process to lift production growth.”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are continue rising. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



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China Manufacturing Rises to 2-Year High!

The HSBC China Manufacturing Flash Purchasing Managers' Index, compiled by Markit, increased +0.4 to 51.9 in January 2013, the highest since January 2011 (54.5).

China Manufacturing PMI by Month Manufacturing began expanding, an Index reading of greater than 50, in November 2012. The chart peak was 55.3 in November 2010. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: “At 51.9, January’s HSBC China manufacturing PMI rose for the fifth consecutive month to the highest level in two years, heralding a good start to the New Year. Thanks to the continuous gains in new business, manufacturers accelerated production by additional hiring and more purchases. Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China's ongoing recovery in the coming months.”

China Manufacturing PMI Moving Averages The short, intermediate, and long-term trends have reversed and are now rising. The PMI is a percentage - not a total.
PMI > 50.0 is expansion, PMI < 50.0 is contraction



The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

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China LEI Increases: "Momentum may already be abating"

The Conference Board: China Monthly Leading Economic Index

China Monthly LEI

The current December 2012 reading is a post-recession high.



“Growth in the LEI for China slowed in December. A decline in real estate activity, a drop in new export orders, and weak consumer confidence accounted for the slowing, while credit extension and improved conditions in the manufacturing supply chain offered only little support,” says Andrew Polk, resident economist at The Conference Board China Center in Beijing. “Growth in the CEI moderated as well, underscoring the notion that economic momentum may already be abating, and is unlikely to rebound much further in 2013. We expect China to grow at 7.5 percent this year, slightly down from the 7.8 percent increase in 2012.”

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China Services Sector Expands

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China Manufacturing PMI, Services NMI, and Composite PMI by Month
PMI > 50.0 is expansion, PMI < 50.0 is contraction



Hongbin Qu, Chief Economist, China Co-Head of Asian Economic Research at HSBC, said: "Despite the moderation of December’s headline services PMI, the underlying strength of services sectors improved in terms of stronger new business flows and employment growth. This, plus the further pick-up of manufacturing growth, suggests that China is on track for achieving around 8% y-o-y GDP growth recovery in 4Q".

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