Goldman Sachs Weekly Tracker: China's High-Frequency Economic Indicators Show Divergence
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Goldman Sachs Weekly Tracker: China's High-Frequency Economic Indicators Show Divergence
The report updates four categories of high-frequency indicators—consumption and mobility, production and investment, macro activity, and markets and policy—showing improvement in primary home sales and some logistics and energy indicators, while steel, consumer confidence, and some mobility indicators remain weak.
- Daily primary home sales in 30 cities rebounded over the past week and exceeded the level of the same period last year, while second-hand home sales in 16 cities declined week-on-week but remained above the level of the same period last year.
- Domestic flights declined slightly and cancellation rates increased slightly; traffic congestion eased but was broadly in line with the same period last year.
- Steel demand and production continued to weaken, while daily coal consumption in coastal provinces increased week-on-week and exceeded the level of the same period last year.
- Local government special bond issuance has reached RMB 2.40tn year-to-date, with proceeds from January to May still primarily allocated to municipal construction and industrial parks.
- Interbank repo rates rose, while the overnight repo rate declined slightly; the renminbi appreciated against the US dollar and the CFETS basket over the past week.
Report interpretation
Overview
Goldman Sachs' China Economic Activity and Policy Tracker is updated weekly across four groups of high-frequency indicators: consumption and mobility, production and investment, other macro activity, and markets and policy. The report aims to provide a more timely view of the impact of energy price supply shocks and policy changes on China's economic activity. The data in this issue show broad structural divergence: primary home sales, coastal coal consumption, port container throughput, and the renminbi exchange rate have improved relatively, while the steel chain, consumer confidence, domestic flights, and oil demand readings remain weak.
Core views
The core view is that China's high-frequency economic activity is neither improving nor deteriorating uniformly, but instead showing divergence across sectors. In housing transactions, primary home sales rebounded and exceeded the level of the same period last year, while second-hand home sales declined week-on-week. On the production side, steel demand and output continued to fall, indicating continued pressure on the construction and industrial chains. On the energy and logistics side, coastal coal consumption and port container throughput were relatively strong, but the oil demand nowcast fell to 16.5mb/d and freight volumes of vessels departing from 20 major ports declined. In policy and markets, special bond issuance continued to advance, money-market rates diverged, and the renminbi appreciated against the US dollar and the CFETS basket, while the depreciation bias implied by the USDCNY fixing strengthened.
Analysis framework
The report uses a high-frequency tracking framework, grouping and monitoring indicators including housing transactions, flights, traffic congestion, refined oil prices, industrial products, steel, coal consumption, special bonds, anti-corruption proxy indicators, port throughput, oil demand, inventories, repo rates, exchange rates, and policy announcements, while comparing weekly changes with levels from the same period last year.
Methodology notes
Four-group indicator tracking
Short-term changes in China's economy are monitored using four categories of indicators: consumption and mobility, production and investment, other macro activity, and markets and policy.
Ratio of actual travel time to free-flow travel time
A higher ratio indicates more severe congestion. The report notes that the data source switched from Amap to Baidu Maps starting in 2022, while the city sample decreased from 100 to 98 cities.
High-frequency nowcast of China's oil product demand
The GS nowcast provides a high-frequency measure of demand, while GS balances are based on supply-and-demand estimates updated every six weeks.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Chinese Macro AssetsDirectly related
- Strengths
- Progress in special bond issuance and improvement in some property and logistics indicators should help stabilize growth expectations.
- Weaknesses
- Weak consumer confidence, steel demand, and some mobility indicators indicate an uneven recovery in domestic demand.
- Comparison
- Compared with single monthly macroeconomic data points, high-frequency indicators can reflect weekly marginal changes more quickly.
- Risks
- High-frequency indicators are volatile and may be affected by seasonality, weather, policy windows, or changes in data sources.
- Renminbi Exchange RateDirectly related
- Strengths
- The renminbi appreciated against the US dollar and the CFETS basket over the past week.
- Weaknesses
- The depreciation bias implied by the USDCNY fixing strengthened.
- Comparison
- There is some divergence between spot performance and the signal from the fixing.
- Risks
- External US dollar movements, policy guidance, and capital flows may change the direction of the exchange rate.
- Chinese Interest Rates and LiquidityDirectly related
- Strengths
- The overnight repo rate declined slightly, indicating that short-term funding costs were not tightening across the board.
- Weaknesses
- Interbank repo rates rose over the past week.
- Comparison
- Money-market rates at different maturities or measured under different definitions diverged.
- Risks
- Open-market operations, fiscal deposits, and the pace of special bond issuance may affect liquidity.
- Commodities and EnergyDirectly related
- Strengths
- Daily coal consumption in coastal provinces increased and exceeded the level of the same period last year, while port container throughput rose.
- Weaknesses
- The oil demand nowcast fell to 16.5mb/d, while steel demand and production continued to decline.
- Comparison
- Coal consumption and port data were relatively strong, while the oil product and steel chains were weak.
- Risks
- Energy price shocks, changes in industrial demand, and inventory fluctuations may amplify commodity price volatility.
Key data
- Local government special bond issuance year-to-dateRMB 2.40tnThe report states that local government special bond issuance had reached RMB 2.40tn year-to-date as of this issue.
- Latest reading of China's oil demand nowcast16.5mb/dThe GS nowcast shows that China's latest oil product demand reading fell to 16.5mb/d.
- Primary home salesDaily sales in 30 cities rebounded over the past week and exceeded the level of the same period last yearFrom the title of Figure 1 in the report.
- Second-hand home salesDaily sales in 16 cities declined over the past week but exceeded the level of the same period last yearFrom the title of Figure 2 in the report.
- Renminbi exchange rateAppreciated against the US dollar and the CFETS basket over the past weekFrom the title of Figure 21 in the report.
Impact & implications
For investment implications, the report supports a cautious, segmented view of China's macroeconomic momentum. The improvement in primary home sales and continued progress in policy financing should help stabilize growth expectations, but weakness in steel and consumer confidence suggests that domestic demand and the property-chain recovery remain fragile. Renminbi appreciation and changes in money-market rates affect foreign exchange, interest rates, and cross-asset pricing, while energy, port, and coal consumption indicators provide marginal signals on industrial activity and commodity demand.
Risks
- High-frequency indicators may be affected by seasonality, weather, holidays, and changes in sample coverage, and cannot be directly equated with monthly or quarterly macroeconomic data.
- The improvement in housing transactions is concentrated primarily in new homes; the week-on-week decline in second-hand home sales indicates that the property recovery remains uneven.
- The continued decline in steel demand and production may reflect ongoing pressure on physical activity in the property and infrastructure chains.
- The simultaneous appreciation of the renminbi spot rate and strengthening of the depreciation bias implied by the fixing indicate divergent exchange-rate signals.
- The report contains substantial regulatory disclosures and does not constitute individual stock investment advice or personalized investment advice.
What to watch
- Whether primary home sales in 30 cities and second-hand home sales in 16 cities can remain above the level of the same period last year.
- Whether domestic flights, cancellation rates, and the urban traffic congestion index improve, confirming a recovery in consumption and mobility.
- The combined changes in steel demand, steel production, coastal coal consumption, and port throughput.
- The impact of local government special bond issuance and the allocation of proceeds on infrastructure and industrial park investment.
- Subsequent trends in interbank repo rates, the overnight repo rate, and the renminbi against the US dollar and the CFETS basket.
- Major macro policy announcements and their impact on market expectations.