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China’s newest economic indicator

27
April
2017
News
SMSF, news, Australian economy, Global economy

The humble washing machine is fast becoming an important marker in the Chinese economy. With China being the second largest economy in the world, and Australia’s major trading partner, any forward insight into economic health can be a game changer for many.

Beijing has traditionally managed most things related to the Chinese economy; everything from where cities get built, what industries to support, interest rates, and also economic data.

China’s GDP prints tend to arrive in record time (days) after the corresponding quarter. Compare that to smaller and more digital nations like Australia where our quarterly data is usually published 6-8 weeks after the corresponding quarter. The speedy and almost sycophantic published economic data has lead economists to question what is really going on in the Chinese economy. The Economist developed the Li Keqiang Index. The Index was named after Premier Li and is considered a more real measure of growth as it looks at more granular detail and includes real measures such as railway cargos, electricity consumption, and loans.

Bloomberg have now added to that dataset with a 1:1 accuracy on housing sales… washing machine production. So if you want to know how the housing sector is performing, look no further than the humble washing machine!

The latest data suggests the Central Government’s credit controls are starting to bite, and housing sector sales are forecast to slow (based on washing machine production as the forward indictor).

How’s that for useful?

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