The Day at a Glance | January 17 2023

*China´s economy grew 2.9% in the 4Q22, exceeding market expectations (1.6%e.).

*Industrial production in China continued slowing down in December. Retail sales receded for a third consecutive month, although more moderately.

*The “Empire State” manufacturing index dropped to its 32-month low.

*Yasmin Esquivel announced she will not resign as Minister of the Supreme Court Justice after University ethics panel found she plagiarized undergrad thesis.

*China´s population decreased for the first time in six decades. China´s statistics agency stated that the population decreased in 850 thousand and that it had 1.41 billion inhabitants at the end of 2022.  

*The World Economic Forum identified the main short and long-term global risks. The 2-year list of risks are led by the cost of living crisis; extreme climate conditions & natural disasters, and geopolitical conflicts. The 10-year list of risks is led by the failure to slow climate change.

Economic environment

China´s GDP surprised to the upside in the 4Q22, but logged a slowdown at the end of 2022. In the 4Q22, China´s economy recorded a 2.9% annual rate of growth, which led to a 3.0% average increase throughout the year – below the government´s 5.5% target. At a quarterly rate, GDP didn´t log any changes (0.0%) while forecasts expected a -0.8% contraction. Overall, the slower rate of expansion is attributed to restrictive anti-Covid measures that the government carried out in 2022. The GDP figure came along with industrial production and retail sales figures. Similar to GDP data, industrial production surprised to the upside by logging a 1.3% annual increase, although it slowed down from its previous 2.2%, and logged its third consecutive decrease. For their part, retail sales receded -1.8% annual (vs -5.9% Nov.) and beat analysts´ estimates of a -9.0% setback. The rebound in Covid-19 cases in December negatively affected production and sales. However, the more moderate decrease in sales is noteworthy and could point towards a faster recovery in the domestic market in light of eased anti-Covid measures.  

New York´s manufacturing activity plunged. New York´s manufacturing index known as the “Empire State” logged a 32.9 point figure in January (vs -11.2 prev.) and significantly lower than the -8.6 expected by analysts. The index dropped 22 points. The new orders component decreased 28 points (to -31.1); while deliveries set at -22.4. The employment sub-index stood out at 2.8 points, while the price paid and received for manufacturing decreased to 33 and 18.8 points, easing inflationary pressures. The “Empire State´s”  relevance is due its high degree of correlation with the manufacturing ISM – it´s considered to be a leading indicator of manufacturing activities in the US. However, sub-indices that measure future activity expectations logged slight progress.