| Good News from China? Put This Date in Your Diary… Mining.com Wednesday, 3 April 2013 Melbourne, Australia By Dr. Alex Cowie |
Good News from China? Put This Date in Your Diary… The Fuel of the Future isnt Oil Its Gas Coming Soon: The Next Breakout For GoldIn todays Money Morning:…resource investors take note…an inside view on China…big news from the Mediterranean…how the US Fed is creating a disaster…
Good News from China? Put This Date in Your Diary…
Heres a date for resource investors calendars: 1pm on the 15th of April.
Thats when we hear the rate at which China grew during the first three months of this year.
This will be one of the most important data points out this month. You see, Chinese growth fell steadily through 2011 and 2012. And this saw resource stock prices follow the Chinese numbers down.
But then…the last reading of 2012 showed a sudden increase in growth.
The trillion-dollar question is this: was this a one off, or could it be the start of a Chinese recovery?
We find out soon. Until then the depressed resource sector hangs in the balance…
We saw a pretty decent jump when Chinese growth increased in the last quarter of 2012. It bounced from 7.4%, to 7.9%, almost making up for the falls of the previous two quarters.
Chinese Growth Accelerating Again?
Source: trading economics
So, Whats in Store Next?
Well, Im starting to think well get a solid result, as in higher than 7.9%. This would be a bad look for the China bears. One big reason to expect a solid result is some of the data weve seen.
The PMI (purchasing managers index) is a good up-to-the-minute leading indicator on how much activity is going on at business level. Its been a pretty reliable heads up on what to expect from the quarterly growth rate.
Of course, it means trusting government statistics, which can be a leap of faith. Fortunately we have an alternative. Markit Economics compiles a non-government measure of Chinas PMI, on behalf of HSBC. This gets announced as the HSBC PMI.
The good news is that the numbers are looking much better here. To put it in context, above 50 is positive, 52-53 was typical prior to the GFC, and 57 is about as high as it ever gets.
This January we saw it at 52.3, in February it came in at 50.4 (lower due to the Chinese New Year), and Marchs just came in at 51.6. The numbers have been above 50 now for five months.