New data on China that has trickled in over the last few days suggests the damage coronavirus has wrought on the world’s second-largest economy could be worse and more prolonged than previously expected, despite a decline this week in the number of new infections in the country. On Sunday, officials in Hubei province reported 196 new infections, marking the first time since January there have been fewer than 200 new cases in a day. Since the virus first broke two months ago there have been 80,026 cases and 2,912 deaths in China, shutting down schools, businesses, factories and international travel for weeks beyond the traditional Lunar New Year holidays in the country.
Now that impact is starting to show up more tangibly in economic data.
PMI plummets
China’s Purchasing Managing Index — a measure of purchasing sentiment amongst manufacturers — fell to its lowest level on record for the month of February, dropping from 50.0 in January to just 35.7, a range that indicates the Chinese economy is heading towards a contraction. For comparison’s sake, at the start of the global financial crisis in November 2008, Chinese PMI had dropped to 38.8. The Purchasing Managing Index is a particularly important gauge of future economic activity because it surveys business executives across various industries who weigh in on indicators like inventory orders, employment, production levels and supplier deliveries. Much of the global supply chain is linked to China, given that it is the world’s largest manufacturing hub. Some analysts, however, remained optimistic despite the record-low PMI data. “China continues to ramp up policy easing and other support, which will help growth rebound into the second quarter,” wrote UBS Global Wealth Management’s chief investment officer Mark Haefele in a note. “While new clusters outside China are a concern, the domestic situation appears to be normalizing.”
Gambling ghost town
Macau, home to the largest casino in the world, saw its economy shrink the most since 2016, as overall casino revenue plunged by 11.3 per cent in February due to a hit in the number of visitors to the gambling hub. On a year-over-year basis, the region’s gross gambling revenue in February was down a whopping 87.8 per cent from a year earlier, according to data from the Gaming Inspection and Coordination Bureau. In a precautionary measure, Macau had closed its borders with China in early February and ordered casinos to shut down for 15 days to control the influx of visitors from Hubei province. Although Macao is a global gambling hub, 70 per cent of its tourists come from China, where gambling is illegal.
A handout photo released on March 2, 2020 by Nasa and Earth Observatory shows maps displaying nitrogen dioxide (NO2) values across China from January 1-20, 2020 (before the quarantine) and February 10-25 (during the quarantine) which illustrates a significant decrease in NO2 over China, partly related to the economic slowdown following the outbreak of the COVID-19.
JOSHUA STEVENS/NASA Earth Observatory/AFP via Getty Images
Carbon cutback
Chinese carbon emissions in the first three weeks of February were dramatically lower than usual due to the shut down of thousands of factories across the country. A report by the Center for Research on Energy and Clean Air (CREA) said that carbon emissions have been about 25 per cent lower than usual this time of the year. Daily power generation at coal plants was at a four-year low, according to the Finland-based CREA, while steel production sank to a five-year low. An analysis from Capital Economics tracking coal consumption at power plants in China, found they were about 50 per cent less than this time last year. Data collected last week from NASA satellites also found there was a significant drop in levels of nitrogen dioxide, a gas emitted by vehicles and industrial plants, across China between Jan 1 and Feb. 25.
Other indicators
Daily property sales in 30 Chinese cities fell to just under 2,000 units, compared to over 5,000 units this time last year, according to an analysis from Capital Economics. The research firm’s China data also showed that four weeks after the start of the virus, containers waiting to be unloaded at Chinese ports were double what they usually were, an indication of just how many Chinese workers and businesses were out of action in the first two months of 2020.
Gloomy outlook
The hit on China’s manufacturing index has sparked a number of gloomy forecasts about the country’s upcoming quarterly GDP numbers. ANZ bank of Australia said in a Monday morning note China’s GDP would slide to 4.1 per cent this year, from just over six per cent. The bank also expects Chinese GDP to grow by just two per cent in the first quarter of 2020. A Morgan Stanley report forecast that China’s economic growth in Q1 2020 could fall to 3.5 per cent if factory production remains slowed. According to China’s Ministry of Industry and Information Technology, just under a third of small and medium-sized businesses have resumed operations as normal.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
