Searchlights in the Darkness

The impact of the Covid-19 virus outbreak on China’s economy is by far the most significant question currently confronting markets, and yet there have been almost no official data released to anchor investors’ expectations. A number of higher-frequency sectoral data points are available, and they all point to an unprecedented contraction in activity across China’s industrial sector in February. But most important among these indicators are those related to the transportation of workers—a key bottleneck in restoring production right now—and property transactions, where a decline in sales has the potential to extend weakness in the economy and raw materials demand for a longer timeframe, by reducing investors’ demand for housing.

In this note, we provide a brief analysis of the higher-frequency data points we are tracking to monitor conditions in China’s economy before official output data are scheduled for release in mid-March, and discuss their significance.

Posted March 13, 2020
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