CEIC Insights | US nowcast; India banks and manufacturing; Mexican nearshoring; China GDP
Key analysis from the past seven days driven by CEIC's powerful blend of traditional and alternative economic data
Data stories of the week:
CEIC’s latest nowcast projects more upbeat US growth
Our latest nowcast bolsters the case for a US soft landing. In fact, growth is picking up -- fodder for a scenario where the Federal Reserve Board will cut rates more slowly than expected.
Third-quarter GDP likely expanded 3.8% on an annualized basis, picking up from 3% in Q2. This would be the most robust expansion since the rate-hiking cycle began in early 2022. Our nowcast also predicts further acceleration to 4.3% by the first quarter of 2025.
The official GDP figure will be released by the @bureau of economics analysis on Oct. 30. Swaps are showing that traders expect fewer rate cuts, while Treasuries have been selling off like it’s 1995 – when Alan Greenspan famously orchestrated a soft landing after a rate-hiking cycle.
This weekly nowcast is one of CEIC's newest additions. Our proprietary model extracts signals from alternative and traditional economic datasets; users can also see relative contributions of explanatory variables. Almost half of our signals were extracted from datasets like payrolls and unemployment insurance. Energy, loan and retail sales data provided further clarity.
We've also expanded our offering with similar nowcasts for the United Kingdom, France, Germany, Canada, Mexico, Japan, South Korea, and Turkey.
CEIC users, access the chart here.
Not a user? Request a demo
Promising trends in China’s latest data
China announced its stimulus package in September, as the third quarter was coming to an end. With official data now released for those three months, we can take a snapshot of the economy in charts: headline GDP was basically flat, but there were bright spots in services, consumption, investment and production.
Real GDP (based on constant prices) rose at a 4.6% year-on-year pace in the quarter, slowing from 5.3% and 4.7% in Q1 and Q2. The tertiary sector, i.e. services, accelerated to a 4.8% growth pace in Q3 as primary and secondary sectors slowed.
Metrics for the month of September showed accelerating retail sales and fixed asset investment. CEIC's proprietary leading indicator, which is designed to anticipate the peaks and troughs of the business cycle, has also seen a steep pickup.
To reach China's annual economic growth target of 5% for the year, GDP would need to expand by 5.4% year-on-year in the fourth quarter.
CEIC users, access the chart here.
Not a user? Request a demo
Indian banks prefer consumers over manufacturers
India's government has made concerted efforts to bolster its manufacturing base. The nation's banks, however, would rather lend to the nation's growing middle class.
As a share of total credit issued by scheduled commercial banks, industry has contracted from 45% in Q4 2015 to 24% as of Q4 2023.
By contrast, credit to households has surged to a 30% share, with most of that growth coming from housing loans. Lending to the service sector has been popular, too.
CEIC's granular data (sourced in this case from the Reserve Bank of India (RBI) ) lets us break down lending by public-sector, private-sector and foreign-owned banks.
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This reveals that foreign banks are an outlier; they have stayed focused on the industrial market, which still accounts for more than 40% of their loans, while their proportion of the household credit market shrinks.
CEIC users, access the chart here.
Not a user? Request a demo
More vehicles, fewer electronics: Mexico's border-state exporters diverge
Mexican manufacturing has thrived on the back of US "nearshoring,” but not all sectors are benefiting evenly. Vehicle exports have been outperforming significantly while the electronics industry slumps.
With the help of regional data newly added to the CEIC platform, we can get a sense of the strengths and weaknesses of Mexico's various border states.
In the second quarter, Coahuila, on the border with West Texas, saw its exports rise by more than 9.4% year-on-year. This state is highly specialized in in vehicles and auto parts.
Meanwhile, neighboring Chihuahua experienced a decline of 2.1% on that basis. It has a much more diversified production base that makes it Mexico's biggest exporting state. The electronics industry is significant and it's the original home of the "maquiladora" NAFTA-era factory model, where plants import and assemble duty-free components for export.
Indeed, auto-related exports were the primary driver of Mexico's exports in Q2: 71% of the USD 4.2 billion ear-on-year export increase in Q2 was due to vehicles. The second-largest category—computers, communication equipment, and other electronics—saw a decline of USD 39 million.
Another border state whose exports declined in Q2 was Nuevo León. It’s set to become a global hub for electric mobility when Tesla completes its latest "gigafactory;" Elon Musk's electric-vehicle company has delayed completion of this facility, however.
CEIC users, access the chart here.
Not a user? Request a demo
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