The Chinese Economy: On The Road Again

Manufacturing still lacklustre in April, but Services are definitely soaring

The First Data on Economic Activity Levels in China - Every Month
The only survey with current month, month-on-month, monthly year-on-year, and forward looking questions
Updated: April 22, 2024

The marked difference between the Chinese Services and Manufacturing sectors performance continues to remain in evidence. But overall the latest Sales Managers Survey shows the economy as a whole is now waking up after its period in the doldrums.

Source: World Economics
Note: Data Shown as a Diffusion Index. (50 = 'No Change', above 50 = Increasing growth, below 50 = Declining growth)

Over the whole of the first quarter of 2024 the overall Manufacturing Sector Sales Managers Index remained below the crucial 50 index level, indicating declining output. In contrast the Services Sector overall Sales Managers Index remained at an average index reading over the first quarter of 52.4, indicating real growth in output. The now dominant Services sector's resilience provided enough impetus to ensure that the combined Manufacturing + Services sector Index remained over the 50 no growth level, with a Quarter 1 reading of 50.9, indicating overall albeit modest growth in the Chinese economy.

The new Sales Managers survey results for April show the overall Manufacturing Sales Index at a 5 month high, and now very close to the 50 "flatlining" level. This means that, despite falling prices keeping sales values relatively low (the Sales Managers Prices Index remains well below 50), actual physical production is ramping up once more.

The Services Sector Sales Managers Survey results show a much brighter picture, with the Sales Growth Index up at a 9 year high. Even the Services Price Index is up at a 7 month high, and now far from deflation with an Index reading of close to 53.

Adding the two parts of the economy together to get an overall view of the State of China, the numbers start to look much more in-line with official forecasts of 5% growth in 2024. All Indexes are now at or way beyond recent month highs, and the all sector overall Sales Managers Index is on an 11 month high. Unless recent data has been in some way influenced by unseen forces (which seems unlikely - but this is China!) it appears that the Chinese economy is once again poised to exceed market expectations.

Sales Managers Index Components: All-Sectors

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About the Sales Managers Indexes

The Sales Managers' Indexes provide the earliest monthly data on the speed and direction of economic activity in key growth areas of the world.

The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of companies stratifying all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.

Key advantages of the SMI's:

• The SMI's provide the first indication each month of the speed and direction of economic growth.
• The SMI's provide the most complete indication of growth, covering all private sector activity.
• The SMI's are based on a key occupational group - sales executives - uniquely able to sense accurate changes in business activity levels.
• The SMI survey base - salespeople - are used by virtually all businesses, including in frontier markets, unlike other occupational groups.
• The SMI's focus on the key countries contributing to over 60% of China growth in recent years.