Satellite Data Reveals September Uptick in China's Economic Performance

Satellite Data Reveals September Uptick in China's Economic Performance

01 Oct, 2023

 

Satellite Data Reveals September Uptick in China's Economic Performance

 

Satellite data analysis by SpaceKnow, a US-based company, indicates that activity around Chinese shopping malls remained robust in September, following an August increase. Additionally, a sustained uptick in cement manufacturing, which commenced in June, persisted throughout September, offering encouraging signs for China's economic recovery. According to Jan Pintera, an economist at SpaceKnow, these observations suggest that the Chinese construction sector is heading in a positive direction, with renewed consumer confidence.

Furthermore, data from Baidu Inc., analyzed by Bloomberg New Energy Finance, reveals a significant surge in traffic congestion in China during the week ending September 27. This traffic level is the highest recorded for any week in 2022 and 2023. The increasing traffic congestion has been a consistent trend since the beginning of August.

SpaceKnow also compiles a new orders prediction benchmark, which incorporates various satellite-derived activity indicators to forecast China's official manufacturing purchasing managers' index (PMI). This gauge climbed to 51 in mid-September, marking a three-point increase from the previous month.

However, Pintera notes that the latest data on cement production from SpaceKnow indicate activity levels lower than those in 2021, suggesting that the prolonged property slump continues to hamper construction. Additionally, activity around shopping malls peaked at the end of August and has slightly weakened since then.

While there are questions about the sustainability of the growth recorded in official data for August, particularly in light of ongoing weakness in the property sector, several indicators suggest that China's economy has gained momentum in recent weeks. For instance, World Economics's all-sector Sales Growth Index for China reached 53.1 in September, marking a six-month high. The Emerging Industries PMI, viewed by some economists as a leading indicator for China's official manufacturing PMI, rose to 54 in September, up from 48.1 in the previous month.

Taking these indicators and seasonal factors into account, Goldman Sachs Group Inc. economist Hui Shan predicts that China's manufacturing PMI will increase to 50.2 in September, up from 49.7 in August. This would be the first reading above 50, indicating an expansion in output, since March. The official PMI figures are scheduled for release on Saturday.

Looking ahead, Larry Hu, chief China economist at Macquarie Group Ltd., anticipates that the recovery will continue, driven by three favorable factors: a recent shift in fiscal stance, stabilized exports, and adjustments in property policies.

 


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