Disjointed reopening of China? The Week Ahead from Thomas Watts, abrdn

by | Jul 17, 2023

Shanghai, China

Thomas Watts, Investment Analyst, abrdn, comments on the economic data releases this week.

He said: “The coming week presents another busy few days for economists, waking up to a raft of Chinese data this morning, being given the chance to evaluate just how much of a disjointed the reopening of the world’s second largest economy has been. 

“The beginning of the week will allow us to gauge the overall health of the Chinese economy through three pieces of data in total. Retail sales, industrial production and possibly the most important, Gross Domestic Product (GDP). The reading is important for market watchers as it acts as the broadest measure of economic activity and the primary gauge of the economy’s health. The data itself will measure the change in the inflation-adjusted value of all goods and services produced by the economy, giving us an insight into most facets of the Chinese post pandemic recovery.

“From the world’s second largest economy, to its biggest, our next area of focus will be the US, as the Census Bureau releases its retail sales numbers. The data allows us to examine what the primary gauge of consumer spending is, in turn accounting for the majority of overall economic activity. The day will also bring us industrial production figures as well as housing market data, all adding to a much better idea as to the strength of the US economy.

“Setting the tone on domestic shores, Wednesday will see our own inflation readings released, made all the more important as the UK gets left behind by several other developed economies in terms of cooling price rises. With last month’s reading showing that prices failed to drop despite forecasts that they would, all eyes will be on the data this time around for any signs of inflation weakening. Investors will also be watching out for core inflation readings, (stripping out more volatile sectors such as energy and food) which were shown to have ticked up during the last announcement.”

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