On the heels of data showing land sales collapsing, tonight's smorgasbord of data on consumption, industrial output and investment will reveal the extent of the damage caused by an outbreak of the delta variant.
Perhaps most notably, year-over-year retail sales rose just 2.5% in August, dramatically worse than the +7% expected and well below the +8.5% in July.... Retail weakness was most pronounced in communication appliances, clothing, household electronics, automobiles and eating out; and as Bloomberg's Kevin Kingsbury notes, retail sales data are liable to be worse for September as folks are apt to stay home during the upcoming holidays.
As we detailed earlier, one month after we warned that China had just unleashed a stagflation shockwave, as inflation - and especially factory price inflation - hit the highest in 13 years, crushing corporate profits, while GDP disappointed, and weeks after we also pointed out that China's credit growth in August had collapsed to the lowest level since the peak of the covid crisis in Feb 2020, Bloomberg writes in its economic preview of China's economic data dump scheduled for tonight that the country's economy "Likely slowed further in August, with data on consumption, industrial output and investment due Wednesday to reveal the extent of the damage caused by an outbreak of the delta variant."
While Bloomberg expects substantial disappointments across the board for the month of August when China was hit hard by another round of covid restrictions, including disappointing consumption, property, infrastructure and unemployment data, the reality is that China may be this close to a hard landing.
The reason for that is that while it won't be featured in tonight's data lineup, high-frequency data - actual data, not that kind "Filtered" by Beijing's National Statistics Bureau - points to an absolute disaster for China's property sector, which has imploded over the past two weeks.
New home sales growth data for WIND's 30-city sample serves as a good tracker of official NBS new home sales growth, thanks to their high correlation coefficient of 0.92 during the period from January 2018 to July 2021.
In volume terms, it also dropped sharply to -38.3% y-o-y from -21.9%. Although high-frequency land sales data may be under-reported to some extent, as WIND may not receive all cities' data in a timely manner; the downtrend in land sales growth is quite evident.
https://www.zerohedge.com/markets/chinas-economy-suddenly-disintegrates-land-sales-crater-90
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