FXStreet (Bali) – According to the Asian Economics Team at Nomura, recent Chinese data suggest that an economic rebalancing is underway.
Key Quotes
“Following last week’s Q2 GDP growth data release, the government also unveiled part of the GDP expenditure breakdown and labour market data. GDP expenditure data show a high contribution from final consumption of 4.2 percentage points (pp) to the 7% y-o-y growth in H1, compared to its contribution of 4.0pp to 7.4% growth in H1 2014.”
“This implies that consumption grew at a pace of 8.2% y-o-y in H1, according to our estimates. The figure represents an acceleration in consumption growth from both full-year 2014 (7.2%) and H1 2014 (7.8%), although it is slightly smaller than the seasonally strong Q1 2015 number (8.7% y-o-y).”
“The official labour market survey data, based on a sample of 101 cities, indicates a still tight labour market. The labour demand/supply ratio edged down to1.06 in Q2 – i.e. there are 106 job vacancies posted in urban job markets for every 100 job seekers – after a record high of 1.15 in Q4 2014.”
“Moreover, the detailed breakdown shows strong year-on year growth of job creation in the transportation and logistics, financial and IT sectors, while in contrast, there has been a large decline in construction, retail and wholesale, and manufacturing sectors.”
“We believe such a shift is related to surging online sales and booming financial services, coupled with slowing property and manufacturing investment. Looking ahead, there may be some risk of lay-offs in the financial sector following the sharp equity market correction in late June and early July.
“Overall, these data paint a consistent picture of continued improvement in the economic structure and a rebalancing away from investment towards consumption, and away from industrial towards services sectors.”
(Market News Provided by FXstreet)