Chinese manufacturing; Land sales

• China manufacturing: The “flash” manufacturing gauge was 50.4 in October – a three-month high.
• Land sales: The Housing Industry Association reported that land sales rose 10 per cent in 2013/14 and were up 8.4 per cent in the June quarter alone – the best in a year.

What does it all mean?

• Activity in the Chinese manufacturing sector is good without being great. But if Chinese authorities want to boost activity there is plenty of scope, especially with inflation under control.
• The lift in sales of residential land over the past financial year will support home building activity in 2015. Arguably more land needs to be produced because solid demand has resulted in higher prices, especially in capital cities. The outlook for home building remains attractive, supporting economic growth. But with inflation contained, the Reserve Bank won’t be in a rush to hike interest rates.

What do the figures show?

“Flash” reading on Chinese manufacturing:

• The “flash” reading of the HSBC Purchasing Managers Index for October was 50.4, up from 50.2 in September and a three-month high. Of the 11 components of the index, six were positive (indicators showing increasing activity). Data was collected between October 13 and 21.
• The report noted: “Domestic as well as external demand showed some signs of slowing although both remained in expansion territory. Disinflationary pressures intensified, as both the input and output price indices declined further. Meanwhile both employment and inventory indices improved.”

HIA/RP Data land sales:

• The Housing Industry Association reported that land sales rose by 8.4 per cent in the June quarter – the strongest result in a year and the second best quarter in four years. Capital city land prices were up 7.4 per cent over the year with prices in Regional Australia up 4.1 per cent.
• The HSBC China Report on Manufacturing is released each month as a gauge on activity in the sector. The “flash” estimate is typically based on approximately 85–90 per cent of survey responses each month and is designed to provide an accurate advance indication of the final data.
• The Housing Industry Association-RP Data Residential Land Report is released quarterly as a guide to activity in the home building sector.

What is the importance of the economic data?

• The HSBC China Report on Manufacturing is released each month as a gauge on activity in the sector. The “flash” estimate is typically based on approximately 85–90 per cent of survey responses each month and is designed to provide an accurate advance indication of the final data.
• The Housing Industry Association-RP Data Residential Land Report is released quarterly as a guide to activity in the home building sector.