Goldman Sachs Weekly Tracker: Second-hand Real Estate Revives but New Homes Remain Weak; Industrial Demand Under Pressure Amid Energy Shock
AI summary card
Goldman Sachs Weekly Tracker: Second-hand Real Estate Revives but New Homes Remain Weak; Industrial Demand Under Pressure Amid Energy Shock
This week's high-frequency data shows new home transactions in 30 cities fell 6.7% year-over-year (YoY), while second-hand homes in 16 cities rose 18.6%; steel demand declined 4.1%, and coal consumption in eight coastal provinces surged 20.9%; the central bank maintained a neutral-to-loose stance with limited volatility in the counter-cyclical factor.
- Daily new home transactions in 30 cities fell 6.7% compared to the same period in 2025; recovery foundation remains fragile
- Transaction activity for second-hand homes in 16 cities significantly increased, up 18.6% YoY as of May 28
- Domestic flight volume fell 8.7% YoY; a cancellation rate rising to 26% reflects travel disruptions
- Steel demand was flat month-over-month (MoM) but down 4.1% YoY; output dipped slightly by 1.9%
- Average daily coal consumption in eight coastal provinces reached 2.5 million tons, a 20.9% YoY surge indicating rising power loads
- Issuance progress of local government special bonds accelerated; as of end-May, 34% of the annual quota had been completed
- The implicit counter-cyclical factor embedded in the USDCNY fixing remained within a range, clearly signaling exchange rate stability intent
- In response to energy supply shocks, the frequency of this tracker has been adjusted to once weekly
Report interpretation
Overview
This report is Goldman Sachs' weekly high-frequency data tracker on China's economic activity and policies, aimed at closely monitoring the impact of recent energy supply shocks on the real economy. The report covers four dimensions: consumption and travel, production and investment, other macroeconomic activities, and markets and policy. Overall, the current economy exhibits structural divergence: 'strong second-hand, weak new' housing market conditions; industrial production demand slowing due to rising energy prices despite significant growth in power consumption; and policy focus remaining on stabilizing growth and safeguarding livelihoods, with monetary and exchange rate policies maintaining steadiness.
Core views
Consumption and Travel: The real estate market is unevenly heated. Daily new home transaction volumes in 30 key cities showed a marginal increase MoM but remained below the levels of the same period last year, falling 6.7% YoY on May 28. In contrast, the second-hand home market in 16 cities performed brightly, with transaction volume up 18.6% YoY on the same day, indicating that transaction activity in the existing stock outpaced the incremental market. Mobility indicators were weak; domestic passenger flights decreased by 8.7% YoY on May 28, with the cancellation rate spiking to approximately 26% (a +10.6 percentage point increase YoY), potentially impacted by weather or temporary control measures. Major city traffic congestion indices remained basically flat, down marginally by 0.8% YoY on May 27. Production and Investment: Traditional industrial demand is under pressure while energy consumption surges. Steel demand remained roughly flat over the past week but still fell 4.1% YoY on May 28; pig iron output also contracted slightly, down 1.9% YoY. In sharp contrast, average daily coal consumption in eight coastal provinces reached about 2.5 million tons on May 26, a 20.9% significant YoY increase, reflecting energy security pressures driven by high temperatures or industrial power demand. Regarding commodity prices, Brent crude has continued to climb above $110 per barrel since the beginning of the year, driving up domestic gasoline and diesel prices; the price index for chemical products such as sulfuric acid also showed volatile fluctuations. Fiscal stimulus pace accelerated; as of May 29, the cumulative issuance scale of 2026 local government special bonds accounted for 34% of the annual quota, with funds arriving quickly. Markets and Policy: Liquidity environment is stable, and exchange rate expectation management is effective. Interbank repo rates (R007, DR007) and the 7-day reverse repos rate trended together, showing funds are in a reasonable surplus state. Regarding the Renminbi exchange rate, the implied counter-cyclical factor in the USD/CNY fixing remained within a range during the past week without significant deviation, indicating that the PBOC's policy orientation to maintain exchange rate stability has not changed. Additionally, the report reviewed major macro policies since mid-March, covering urban renewal, employment stabilization, unified market construction, and trade-in programs for consumer goods, demonstrating that the policy focus lies in supporting the economy bottom line and promoting structural transformation.
Analysis framework
This report adopts a typical high-frequency data cross-validation method to analyze short-term economic pulses. The institution does not rely on single monthly statistical data but captures turning points through a built 'Consumption-Production-Finance' three-dimensional real-time dashboard. Specifically, on the demand side, both new and second-hand home transactions as well as flight and congestion indices are observed simultaneously to distinguish different behavioral patterns of the household sector; on the supply side, physical volume indicators like steel and coal are combined with price indicators like oil and chemicals to isolate the net impact of 'energy supply shocks' on the real economy; on the policy side, actual implementation strength of fiscal and monetary policy is quantified by tracking special bond issuance progress and central bank open market operation rates. This multi-dimensional, high-frequency tracking framework helps timely identify structural changes and potential risk points in economic operations during gaps between official data releases.
Methodology notes
Identify supply-side shocks through divergence between high-frequency physical volume and price indicators
When observing a surge in coal consumption (rising demand-side power load) alongside declining steel demand (weak traditional industrial demand), coupled with soaring oil prices, it typically signifies the economy is facing cost-push supply-side disturbances rather than simple demand expansion or contraction.
Assess exchange rate policy intent using the counter-cyclical factor embedded in the fixing
The difference between the USD/CNY fixing and market forecast value (i.e., the counter-cyclical factor) serves as a window to observe the intensity of the central bank's exchange rate stabilization efforts. If this factor remains within a range oscillating rather than unidirectionally expanding during exchange rate volatility, it indicates the central bank prefers managing expectations through market mechanisms rather than strong intervention.
Map fiscal expenditure implementation rhythm via local special bond issuance progress
Local government special bond issuance is a leading indicator for front-loaded fiscal stimulus. By tracking the proportion of cumulative issuance against the annual quota (e.g., 34%), one can anticipate infrastructure investment growth and actual implementation of broad-based fiscal expenditure ahead of time, compensating for the lag in financial statement data.
Key data
- YoY change in daily new home transactions (30 cities)-6.7%May 28 data, lower than same period in 2025, weak recovery
- YoY change in daily second-hand home transactions (16 cities)+18.6%May 28 data, significantly outperforming new home market
- YoY change in domestic passenger flight volume-8.7%May 28 data, travel recovery lagging expectations
- Domestic flight cancellation rate~26%May 28 data, up 10.6 percentage points YoY
- YoY change in steel demand-4.1%May 28 data, industrial demand remains in contraction zone
- YoY change in average daily coal consumption in eight coastal provinces+20.9%May 26 data, power load significantly rising
- Local special bond issuance progress34.0%As of May 29, share of annual quota
- Brent crude oil price>110 USD/barrelMay peak, energy supply shock pushing up costs
Impact & implications
The research report argues that the economic landscape revealed by current high-frequency data features distinct structural characteristics, which are crucial for understanding short-term macro trends. The 'hot second-hand, cold new' real estate market suggests that residential purchasing decisions have become more rational, and inventory destocking may proceed faster than new project restart recovery; the 'coal up, steel down' industrial sector signal indicates that rising energy costs are squeezing profits in some intermediate manufacturing sectors, warranting vigilance against imported inflation transmitting to PPI. On the policy front, the rapid issuance of special bonds and the central bank's steady operations indicate that authorities retain sufficient policy toolboxes to smooth economic fluctuations when dealing with external uncertainties and internal energy shocks. For investors, this implies avoiding linear extrapolation of single indicators in the short term and instead focusing on segmentation opportunities and risk hedging among different sectors.
Risks
- Duration of energy supply shock exceeds expectations, further suppressing industrial production and consumption demand
- Persistent slump in new home sales drags down recovery in upstream and downstream industries
- Exacerbated external uncertainty leads to volatility in exports and cross-border capital flows
- Non-economic factors reflected in persistently high flight cancellation rates may extend
What to watch
- Sustained changes in transaction volumes for 30-city new homes and 16-city second-hand homes in the coming weeks
- Whether the scissors differential between coal consumption in eight coastal provinces and steel demand will converge
- Formation of physical work volumes after acceleration of local government special bond issuance
- Direction of change in the USD/CNY fixing counter-cyclical factor and exchange rate elasticity
- Impact of domestic refined oil product price adjustment mechanism on downstream inflation expectations