In Portfolioticker today
Today at the stock market
“Wall Street fell on Thursday as losses in industrials and interest-rate sensitive sectors offset marginal gains in tech stocks.
Utilities and real estate dipped 0.6% and 1.0%, respectively. The two sectors, which are considered bond proxies, fell as yields on 10-year Treasury notes hit a 10-month high.
Boeing Co, a high-flying stock of late, fell 3.1%, alongside General Electric Co, which fell 3.3%. Those two stocks weighed most heavily on the Dow, which sagged just a day after closing above 26,000 for the first time. They also contributed to the 0.6% decline in the industrials sector.
“We’ll continue to see a tug-of-war between how fast the economy grows and how fast interest rates rise. It’s likely to lead to more volatility in 2018 than we saw in 2017,” said Kate Warne, investment strategist at Edward Jones in St. Louis.
Investors are keeping a close eye on corporate earnings reports, given the rise in stock valuations.
“There’s a lot of enthusiasm about what tax reform will do, what repatriation will do,” said Michael O‘Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. “Today, there’s just a bit of consolidation after a strong run-up.”
Morgan Stanley wrapped up earnings season for the big U.S. banks with a better-than-expected quarterly profit, driving modest gains in its shares.
Bank of New York Mellon Corp fell 4.4% after the custodian bank said it expected to book more in severance costs in 2018. It was the second-biggest decliner on the S&P.
Alcoa Corp fell 7.0% after the aluminum producer’s earnings missed analysts’ estimates.
IBM and American Express shares were lower after the market close on Thursday following their quarterly earnings reports. Bloomberg report: IBM
The possibility of a government shutdown also loomed, though Warne said she believed it would have more impact on Wall Street’s performance if an agreement was not reached by the end of Friday.
The House of Representatives voted on Thursday to advance a bill for debate that would temporarily extend funding. The government is operating on its third temporary funding extension since the 2018 fiscal year began on 1 Oct 2017.” Reuters
Bloomberg: What We Learned From Wall Street’s Q4 Results
“Wall Street banks are facing some stubborn problems heading into 2018 — but rising profits won’t be among them.
That was the main takeaway as Morgan Stanley wrapped up Wall Street’s fourth-quarter earnings season Thursday, joining peers in announcing bad news about fixed-income trading and good news about the impact of tax cuts.
The firm said the U.S. overhaul would cut its effective tax rate this year to as low as 22%, not counting one-time items, from 31% in 2017. The rate at JPMorgan Chase & Co. and Wells Fargo & Co. will be even lower than that, based on those firms’ estimates. In bond trading, Goldman Sachs Group Inc. reported the steepest decline as an industrywide downturn dragged on.
Here are the key takeaways from the industry’s results:
Investors largely ignored giant one-time charges resulting from the tax overhaul, as those figures had been telegraphed in advance. Lower effective tax rates were of more interest, because they mean bigger after-tax profits and more money that can be returned to shareholders or invested in the business.
Bank of America Corp., which posted a $2.9 billion charge, said its effective rate would go down to 20% in 2018, almost 9 percentage points below its average for the past 3 years.
The entire year was a bust for the fixed-income market, and for some firms, like Goldman Sachs, the fourth quarter dealt an especially hard blow. Low volatility and historically low interest rates, even after small hikes by the Federal Reserve last year, are to blame. Some executives said they’ve seen signs of improvement during the early weeks of 2018.
Most of the biggest U.S. banks were caught in an accounting scandal at Steinhoff International Holdings NV, with only Morgan Stanley escaping unscathed. The others all made loans to the South African retailer, mostly on margin, that had to be written down when the company’s market value dropped by 90 percent and it struggled to survive as a going concern.
Citigroup Inc. led that list with about $370 million in losses and charge-offs.
Tax cuts don’t appear to be a salve for bankers’ job security. Although firms have hired in recent quarters, they continue to reduce overall staff as pressure to cut costs continues — especially in a slower trading environment with narrower interest margins. The collective cuts by the six biggest firms last quarter were the largest since the fourth quarter of 2015.
Advising on mergers and underwriting stocks and bonds offered another bright spot for the quarter. Investment-banking revenue jumped 19% to the highest in more than two years, and executives said they’re optimistic about bigger deal flows thanks to corporate tax cuts. Goldman Sachs Chief Financial Officer Martin Chavez said passage of the tax bill eliminated some uncertainty for companies, and bank’s “level of dialogue with clients has increased across a range of strategic and financial issues.”
JPMorgan CFO Marianne Lake said improved clarity would give corporate customers “confidence to act.” And JPMorgan Chief Executive Officer Jamie Dimon said the U.S. had become more competitive because of the tax reductions, which he said will show up in higher economic and capital-markets activity.
“It’s a very good thing,” Dimon said last week on a call with analysts. “You’ve seen it with corporations; you’ve seen it with sentiment; you’ve seen it with people’s plans.”
Wells Fargo CFO John Shrewsberry said he expects firms to spend more on capital expenditures in 2018 because of the tax changes, adding that some deals may be easier to complete with lower tax rates.” Bloomberg
^ Market indices today (mouseover for 12 month view) Chart: Google Finance
|Index||Ticker||Today||Change||31 Dec 17||YTD|
|S&P 500||SPX (INX)||2,798.03||-0.17%||2,238.83||+4.65%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 17||YTD|
Portfolio stock prices
Apple closed on a record high of $179.26, up 0.09% on yesterday’s record close of $179.10
PayPal closed on a record high of $82.94, up 0.57% on yesterday’s record close of $82.47
Visa closed on a record high of $123.11, up 0.93% on yesterday’s record close of $121.98
VMware closed on a record high of $135.63, up 0.22% on yesterday’s record close of $135.33
|Stock||Ticker||Today||Change||31 Dec 17||YTD|
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“The Bloomberg Dollar Spot Index (DXY) fell 0.2%.
The EUR rose 0.4% to USD 1.224.
Britain’s GBP rose 0.4% to USD1.3892, the highest since June 2016.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
“Oil rebounded after slipping below $69/barrel on Thursday, supported by a record drawdown of U.S. crude stockpiles at the Cushing, Oklahoma delivery hub, despite concerns that OPEC-led output cuts will increase supply from the United States.
Crude is just below its highest price since December 2014, supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and concern that unrest in producer nations such as Nigeria could further curb output.
U.S. crude inventories fell 6.9 million barrels last week, compared with forecasts for a 3.5 million-barrel draw, the U.S. Energy Information Administration said. Crude supplies at the Cushing, Oklahoma delivery hub for U.S. crude futures fell 4.2 million barrels in the week, the largest draw since at least 2004.
After falling the previous week due to cold weather, U.S. crude production rose to 9.75 million barrels per day last week.
OPEC’s monthly report on Thursday raised its forecast for oil supply from non-members in 2018. More: Reuters
“Higher oil prices are bringing more supply to the market, particularly in North America and specifically tight oil,” OPEC said in the report, using another term for shale.
Brent crude, the global benchmark, pared losses, trading at $69.30, down 8 cents/barrel, by 11:26 a.m. EST (1626 GMT), after earlier slipping to $68.80/barrel earlier in the session. On Monday it touched $70.37, the highest since Dec 2014. U.S. crude was up 1 cent at $63.98, having hit its highest since Dec 2014 on Tuesday.
Brent has risen from $61/barrel in early Dec 2017 and some analysts say the rally may be about to run out of steam.
“The upside is now limited for oil prices. U.S. oil producers will ramp up production in the coming months,” said Fawad Razaqzada, market analyst at brokerage Forex.com.
OPEC’s report follows a forecast from the EIA on Tuesday that it expects U.S. oil output to continue to rise in Feb 2018 with production from shale increasing by 111,000 bpd.
The agency previously said U.S. output could reach 10 million bpd in Feb 2018 and 11 million bpd in 2019. Even so, traders said prices were unlikely to fall far due to the OPEC-led curbs and the risk of further disruptions.
Militant group Niger Delta Avengers threatened to attack Nigeria’s oil sector in the next few days, potentially hampering supplies in Africa’s largest exporter. “The impact of such a threat, if carried out, would be significant on the global supply and demand balance. The market is still sensitive to geopolitical developments,” said Tamas Varga of oil broker PVM.” Reuters
Prices are as at 15:47 ET
- NYMEX West Texas Intermediate (WTI): $63.75/barrel -0.34% Chart
- ICE (London) Brent North Sea Crude: $69.16/barrel -0.32% Chart
- NYMEX Natural gas futures: $3.21/MMBTU -0.68% Chart
AU: Labour Force. Dec 2017
Press Release Extract [au_jobs]
Employment and hours
Monthly trend full-time employment increased for the 14th straight month in December 2017 [Lloyd comments: It probably increased for the 15th straight month.]. Full-time employment grew by a further 17,000 persons in December, while part-time employment increased by 8,000 persons, underpinning a total increase in employment of 25,000 persons.
“Full-time employment has now increased by around 322,000 persons since December 2016, and makes up the majority of the 393,000 net increase in employment over the period,” the Chief Economist for the ABS, Bruce Hockman, said.
Over the past year, trend employment increased by 3.3 per cent, which is above the average year-on-year growth over the past 20 years (1.9 per cent). The last time it was 3.3 per cent or higher was in September 2005.
The trend monthly hours worked increased by 4.0 million hours (0.2 per cent), with the annual figure also reflecting strong growth over the year (3.6 per cent).
The labour force participation rate remained at 65.5 per cent after the November 2017 number was revised up [Lloyd comments: Revised up from 65.4 percent.], the highest it has been since March 2011. The female labour force participation rate also increased to a further historical high of 60.4 per cent, having increased steadily over the past year.
The trend unemployment rate decreased slightly to 5.4 per cent in December 2017, after the November 2017 figure was revised up to 5.5 per cent. [Lloyd comments: The trend unemployment rate previously reported for Nov 2017 was 5.4 percent.]
“The trend unemployment rate was 0.3 percentage points lower than a year ago, and is at its lowest point since January 2013“, Mr Hockman said.
States and Territories
Over the past year, the states and territories with the strongest annual growth in trend employment were Queensland and the ACT (both 4.6 per cent), followed by New South Wales (3.5 per cent).
Over the past year, all states and territories recorded a decrease in their trend unemployment rates, except the Northern Territory (which increased 1.6 percentage points).
Seasonally adjusted data
The seasonally adjusted number of persons employed increased by 35,000 in December 2017. The seasonally adjusted unemployment rate increased by 0.1 percentage points to 5.5 per cent and the labour force participation rate increased to 65.7 per cent.”
Australian Bureau of Statistics, “6202.0 Labour Force. Dec 2017“, 18 Jan 2018 More
EU: House Price Index. Q3/2017
Press Release Extract [eu_house]
House prices, as measured by the House Price Index, rose by 4.1% in the euro area and by 4.6% in the EU in the third quarter of 2017 compared with the same quarter of the previous year. These figures come from Eurostat, the statistical office of the European Union.
Compared with the second quarter of 2017, house prices rose by 1.7% both in the euro area and in the EU in the third quarter of 2017.
House price developments in the EU Member States
Among the Member States for which data are available, the highest annual increases in house prices in the third quarter of 2017 were recorded in the Czech Republic (+12.3%), Ireland (+12.0%) and Portugal (+10.4%), while prices fell in Italy (-0.9%).
Compared with the previous quarter, the highest increases were recorded in Ireland (+5.7%), Malta (+4.3%) and Netherlands (+3.7%), while decreases were observed in Romania (-1.6%), Finland and Italy (both -0.5%) and Cyprus (-0.3%).”
Eurostat, “Third quarter of 2017 compared with third quarter of 2016: House prices up by 4.1% in the euro area, Up by 4.6% in the EU“, 18 Jan 2018 More
US: Unemployment Insurance Weekly Claims
Press Release Extract [ser_4]
“Seasonally Adjusted Data
In the week ending January 13, the advance figure for seasonally adjusted initial claims was 220,000, a decrease of 41,000 from the previous week’s unrevised level of 261,000. This is the lowest level for initial claims since February 24, 1973 when it was 218,000. The 4-week moving average was 244,500, a decrease of 6,250 from the previous week’s unrevised average of 250,750.
Claims taking procedures continue to be disrupted in the Virgin Islands. The claims taking process in Puerto Rico has still not returned to normal.
The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending January 6, an increase of 0.1 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 6 was 1,952,000, an increase of 76,000 from the previous week’s revised level. The previous week’s level was revised up 7,000 from 1,869,000 to 1,876,000. The 4-week moving average was 1,921,000, an increase of 4,000 from the previous week’s revised average. The previous week’s average was revised up by 1,750 from 1,915,250 to 1,917,000.
The advance number of actual initial claims under state programs, unadjusted, totaled 360,020 in the week ending January 13, a decrease of 43,599 (or -10.8 percent) from the previous week. The seasonal factors had expected an increase of 24,280 (or 6.0 percent) from the previous week. There were 352,799 initial claims in the comparable week in 2017.
The advance unadjusted insured unemployment rate was 1.7 percent during the week ending January 6, an increase of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,400,581, an increase of 94,899 (or 4.1 percent) from the preceding week. The seasonal factors had expected an increase of 1,876 (or 0.1 percent) from the previous week. A year earlier the rate was 1.8 percent and the volume was 2,518,545.
The total number of people claiming benefits in all programs for the week ending December 30 was 2,341,097, an increase of 236,753 from the previous week. There were 2,506,683 persons claiming benefits in all programs in the comparable week in 2016.
Extended benefits were available in Alaska and the Virgin Island during the week ending December 30.
Initial claims for UI benefits filed by former Federal civilian employees totaled 1,148 in the week ending January 6, an increase of 329 from the prior week. There were 723 initial claims filed by newly discharged veterans, an increase of 218 from the preceding week.
There were 14,401 former Federal civilian employees claiming UI benefits for the week ending December 30, a decrease of 1,979 from the previous week. Newly discharged veterans claiming benefits totaled 8,470, an increase of 3 from the prior week.
The highest insured unemployment rates in the week ending December 30 were in the Virgin Islands (8.1), Alaska (4.0), Puerto Rico (3.5), New Jersey (2.9), Connecticut (2.8), Montana (2.7), Rhode Island (2.6), Massachusetts (2.5), Minnesota (2.5), and Pennsylvania (2.5).
The largest increases in initial claims for the week ending January 6 were in New York (+26,891), Georgia (+11,931), California (+11,927), Pennsylvania (+5,409), and Texas (+5,054), while the largest decreases were in New Jersey (- 8,221), Massachusetts (-4,189), Michigan (-3,151), Ohio (-2,583), and Iowa (-2,156).“
Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 18 Jan 2018 (08:30) More
“The Labor Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 220,000 for the week ended 13 Jan 2018, the lowest level since Feb 1973.
Economists had forecast claims falling to 250,000 in the latest week. Claims had increased over the previous four weeks, with economists blaming difficulties adjusting the data for seasonal fluctuations around moving holidays and unseasonably cold weather.
The Labor Department said claims for California, Arkansas, Kentucky, Maine, Hawaii, Virginia and Wyoming were estimated. Government offices were closed on Monday for the Martin Luther King holiday.
It also said claims-taking procedures continued to be disrupted in the Virgin Islands months after they were battered by Hurricanes Irma and Maria, while claims processing in Puerto Rico was still not back to normal.
Last week marked the 150th straight week that claims remained below the 300,000 threshold, which is associated with a strong labor market. That is the longest such stretch since 1970, when the labor market was much smaller.
The labor market is near full employment, with the jobless rate at a 17-year low of 4.1%.
Last week, the four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,250 to 244,500. The claims data covered the survey week for January’s nonfarm payrolls.
The four-week average of claims rose 8,500 between the Dec 2017 and Jan 2018 survey periods, suggesting some moderation in the pace of job growth. Nonfarm payrolls increased by 148,000 in Dec 2017 after surging by 252,000 in Nov 2018.
Job growth is slowing as the labor market nears full employment. There has been an increase in companies reporting difficulties finding qualified workers. There are about 5.9 million job openings in the country.” More: Reuters
US: New Residential Construction. Dec 2017
Press Release Extract [us_newres]
Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,302,000. This is 0.1 percent (±1.4 percent) below the revised November rate of 1,303,000, but is 2.8 percent (±1.9 percent) above the December 2016 rate of 1,266,000. Single-family authorizations in December were at a rate of 881,000; this is 1.8 percent (±1.2 percent) above the revised November figure of 865,000. Authorizations of units in buildings with five units or more were at a rate of 382,000 in December.
An estimated 1,263,400 housing units were authorized by building permits in 2017. This is 4.7 percent (±0.6%) above the 2016 figure of 1,206,600.
Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,192,000. This is 8.2 percent (±7.7 percent) below the revised November estimate of 1,299,000 and is 6.0 percent (±11.7 percent) below the December 2016 rate of 1,268,000. Single-family housing starts in December were at a rate of 836,000; this is 11.8 percent (±6.5 percent) below the revised November figure of 948,000. The December rate for units in buildings with five units or more was 352,000.
An estimated 1,202,100 housing units were started in 2017. This is 2.4 percent (±2.3%) above the 2016 figure of 1,173,800.
Privately-owned housing completions in December were at a seasonally adjusted annual rate of 1,177,000. This is 2.2 percent (±17.8 percent) above the revised November estimate of 1,152,000 and is 7.4 percent (±13.0 percent) above the December 2016 rate of 1,096,000. Single-family housing completions in December were at a rate of 818,000; this is 4.3 percent (±20.5 percent) above the revised November rate of 784,000. The December rate for units in buildings with five units or more was 346,000.
An estimated 1,152,300 housing units were completed in 2017. This is 8.7 percent (±3.1%) above the 2016 figure of 1,059,700.”
U.S. Census Bureau and the U.S. Department of Housing and Urban Development, “New Residential Construction (Building Permits, Housing Starts, and Housing Completions). Dec 2017“, 18 Jan 2018 (08:30) More
“U.S. homebuilding fell more than expected in Dec 2017, recording its biggest drop in just over a year, amid a steep decline in the construction of single-family housing units following two months of hefty gains.
Housing starts decreased 8.2% to a seasonally adjusted annual rate of 1.192 million units, the Commerce Department said. November’s sales pace was revised up to 1.299 million units from the previously reported 1.297 million units.
The percentage drop for housing starts in Dec 2017 was the largest since Nov 2016. Economists polled by Reuters had forecast housing starts decreasing to a pace of 1.275 million units for Dec 2017.
Homebuilding increased 2.4% to 1.202 million units in 2017, the highest level since 2007. December’s moderation in homebuilding is likely to be temporary amid strong demand for housing that is being driven by a robust labor market.
Builders, however, continue to struggle with labor and land shortages as well as more expensive lumber. A survey on Wednesday showed confidence among homebuilders slipping from an 18-year high in Jan 2018. Builders expected a dip in buyer traffic and sales over the next six months.
Last month, single-family homebuilding, which accounts for the largest share of the housing market, tumbled 11.8% to a rate of 836,000 units as construction fell in the South, the Northeast and Midwest. Homebuilding was unchanged in the West.
Starts for the volatile multi-family housing segment rose 1.4% to a rate of 356,000 units.
While building permits edged down 0.1% to a rate of 1.302 million units in Dec 2017, they outpaced starts. That suggests homebuilding will rebound in the coming months.
Building permits increased 4.7% to 1.263 million units in 2017, also the highest level since 2007.
Single-family home permits advanced 1.8% in Dec 2017, while permits for the construction of multi-family homes fell 3.9%.” More: Reuters
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Stockmarket: Nikkei 225
^ Nikkei 225 movements over the past week Chart: Google Finance
Annual Economic Review
“In 2017, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping as the core, all regions and departments implemented the decisions and arrangements made by the CPC Central Committee and the State Council, adhered to the general working guideline of making progress while maintaining stability, adopted the new development philosophy, focused on the supply-side structural reform and pushed forward structural optimization, shifting of driving forces and quality improvement. As a result, the national economy has maintained the momentum of stable and sound development and exceeded the expectation with the economic vitality, impetus and potential released and the stability, coordination and sustainability strengthened. The economy has achieved stable and healthy development.
According to the preliminary estimation, the gross domestic product (GDP) of China was 82,712.2 billion yuan in 2017, an increase of 6.9 percent at constant price compared with last year. Quarterly year-on-year growth of GDP was:
- first quarter: 6.9 percent
- second quarter: 6.9 percent
- third quarter: 6.8 percent
The value added of the primary industry was 6,546.8 billion yuan, up by 3.9 percent over the previous year; that of the secondary industry was 33,462.3 billion yuan, up by 6.1 percent; and that of the tertiary industry was 42,703.2 billion yuan, up by 8.0 percent.
1. Agricultural Production Enjoyed Another Harvest and Production of Animal Husbandry Grew Stably.
The total grain output in 2017 was 617.91 million tons, an increase of 1.66 million tons compared with last year, up by 0.3 percent. The total output of summer grain was 140.31 million tons, up by 0.8 percent; the total output of early rice was 31.74 million tons, down by 3.2 percent; the total output of autumn grain was 445.85 million tons, up by 0.4 percent. The total output of cotton was 5.49 million tons, up by 2.7 percent. The total output of pork, beef, mutton and poultry was 84.31 million tons, up by 0.8 percent over last year, among which the total output of pork was 53.40 million tons, up by 0.8 percent; the beef 7.26 million tons, up by 1.3 percent; the mutton 4.68 million tons, up by 1.8 percent; the poultry 18.97 million tons, up by 0.5 percent. There were 433.25 million pigs registered, a year-on-year decrease of 0.4 percent and 688.61 million pigs slaughtered, a year-on-year increase of 0.5 percent.
2. Industrial Production Grew Faster with Rising Profit for Enterprises.
The real growth of the total value added of the industrial enterprises above the designated size in 2017 was 6.6 percent, 0.6 percentage point faster than last year.
An analysis by types of ownership showed that the value added of the state holding enterprises was up by 6.5 percent; that of the collective enterprises, up by 0.6 percent; share-holding enterprises, up by 6.6 percent; and enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan, up by 6.9 percent.
In terms of sectors, the value added of the mining dropped by 1.5 percent, the manufacturing increased by 7.2 percent and the electricity, thermal power, gas and the production and supply of water increased by 8.1 percent.
The value added of the high-tech industry and equipment manufacturing increased by 13.4 percent and 11.3 percent year on year, 6.8 and 4.7 percentage points faster than that of the industries above the designated size.
In 2017, the sales-output ratio of the industrial enterprises above the designated size reached 98.1 percent. The export delivery value of these enterprises reached 12,323.0 billion yuan, up by 10.7 percent over last year.
In December, the total value added of the industrial enterprises above the designated size was up by 6.2 percent year-on-year or up by 0.52 percent month-on-month.
From January to November, the profits made by industrial enterprises above the designated size stood at 6,875.0 billion yuan, up by 21.9 percent year-on-year, 12.5 percentage points faster than the same period last year. The profit rate of the principal activities of the industrial enterprises above the designated size was 6.36 percent, up by 0.54 percentage point compared with the same period last year.
3. The Service Sector Maintained Fast Growth and the Business Activity Index Maintained within the Range of Expansion.
In 2017, the Index of Services Production increased by 8.2 percent over last year, 0.1 percentage point faster than last year. In December, the Index of Services Production increased by 7.9 percent year-on-year, 0.1 percentage point faster than last month. From January to November, the business revenue of service enterprises above the designated size increased by 13.9 percent year-on-year, 2.5 percentage points faster than the same period last year; the operating profit of service enterprises above the designated size increased by 30.4 percent, 28.2 percentage points faster; the business revenue of strategic emerging services, producer services and science and technology services increased by 18.0 percent, 15.0 percent and 15.1 percent year on year respectively.
In December, the Business Activity Index for services was 53.4 percent. Specifically, the Business Activity Index for sectors like postal services, telecommunication, broadcast, television and satellite transmission services, internet, software and information technology services, banking and insurance kept within the expansion range of 57.0 percent and above. From the perspective of market demand, the New Order Index for the service industry was 50.9 percent, maintaining within the expansion range for eight months in a row. From the perspective of market expectation, the Business Activities Expectation Index was 60.3 percent, maintaining within the expansion range for seven months in a row.
4. The Investment Structure Continued to Improve and the Floor Space of Commercial Buildings for Sale Decreased.
In 2017, the investment in fixed assets (hereinafter excluding rural households) was 63,168.4 billion yuan, growing by 7.2 percent over last year, 0.9 percentage point slower than last year. Specifically, the investment by the state holding enterprises reached 23,288.7 billion yuan, a rise of 10.1 percent; private investment reached 38,151.0 billion yuan, up by 6.0 percent, 2.8 percentage points faster than last year, accounting for 60.4 percent of the total investment. The investment in the primary industry was 2,089.2 billion yuan, up by 11.8 percent; the secondary industry 23,575.1 billion yuan, up by 3.2 percent, among which the investment in manufacturing was 19,361.6 billion yuan, an increase of 4.8 percent; and the tertiary industry 37,504.0 billion yuan, an increase of 9.5 percent, among which the investment in infrastructure was 14,000.5 billion yuan, up by 19.0 percent, 1.6 percentage points faster than last year. The investment in the high-tech industry and equipment manufacturing went up by 17.0 percent and 8.6 percent year-on-year, 2.8 percentage points and 4.2 percentage points faster; the investment in energy-intensive manufacturing decreased by 1.8 percent compared with last year. The funds in place for investment in fixed assets in 2017 were 62,981.5 billion yuan, up by 4.8 percent compared with last year. The planned total investment in newly-started projects was 51,909.3 billion yuan, up by 6.2 percent. The year-on-year growth of investment in fixed assets from January to December was the same as that from January to November. In December, the investment in fixed assets grew by 0.53 percent month-on-month.
The total investment in real estate development in 2017 was 10,979.9 billion yuan, an increase of 7.0 percent, 0.1 percentage point faster than last year, among which the investment in residential buildings went up by 9.4 percent. The floor space newly started was 1,786.54 million square meters, up by 7.0 percent. Specifically, the newly started floor space of residential buildings went up by 10.5 percent. The floor space of commercial buildings sold was 1,694.08 million square meters, up by 7.7 percent. Specifically, the floor space of residential buildings sold was up by 5.3 percent. The total sales of commercial buildings were 13,370.1 billion yuan, up by 13.7 percent, among which the sales of residential buildings were up by 11.3 percent. The land space purchased for real estate development was 255.08 million square meters, up by 15.8 percent. By the end of December, the floor space of commercial buildings for sale was 589.23 million square meters, down by 15.3 percent over the end of last year. The funds in place for real estate development enterprises reached 15,605.3 billion yuan, up by 8.2 percent.
5. Market Sales Witnessed Steady and Comparatively Fast Growth and Consumption Upgrade Showed Remarkable Momentum.
In 2017, the total retail sales of consumer goods reached 36,626.2 billion yuan, up by 10.2 percent over last year, 0.2 percentage point slower than last year. Specifically, the retail sales of consumer goods by enterprises above the designated size stood at 16,061.3 billion yuan, up by 8.1 percent. Analyzed by different areas, the retail sales in urban areas reached 31,429.0 billion yuan, up by 10.0 percent, and the retail sales in rural areas stood at 5,197.2 billion yuan, up by 11.8 percent. Grouped by consumption patterns, the income of catering industry was 3,964.4 billion yuan, up by 10.7 percent; and the retail sales of goods were 32,661.8 billion yuan, up by 10.2 percent. In particular, the retail sales of the enterprises above the designated size reached 15,086.1 billion yuan, up by 8.2 percent. The sales of upgraded consumer goods witnessed fast growth. Specifically, the sales of telecommunication equipments, sports and recreational articles and cosmetics increased by 11.7 percent, 15.6 percent and 13.5 percent respectively. In December, the growth of total retail sales of consumer goods was 9.4 percent year-on-year, or 0.7 percent month-on-month.
In 2017, the online retail sales reached 7,175.1 billion yuan, an increase of 32.2 percent compared with last year, 6.0 percentage points faster than last year, among which the retail sales of physical goods was 5,480.6 billion yuan, up by 28.0 percent, accounting for 15.0 percent of the total retail sales of consumer goods, or 2.4 percentage points higher than last year. The online retail sales of non-physical goods were 1,694.5 billion yuan, up by 48.1 percent.
6. The Import and Export Further Increased and the Trade Structure Continued to Optimize.
The total value of imports and exports in 2017 was 27,792.1 billion yuan, up by 14.2 percent over last year, putting an end to the continuous decrease in the past two years:
- The total value of exports was 15,331.8 billion yuan, up by 10.8 percent;
- The total value of imports was 12,460.3 billion yuan, up by 18.7 percent;
- The trade balance was 2,871.6 billion yuan in surplus.
The value of general trade increased by 16.8 percent, accounting for 56.4 percent of the total value of imports and exports, 1.3 percentage points higher than last year. The export of electrical and mechanical products increased by 12.1 percent, accounting for 58.4 percent of the total value of imports and exports, 0.7 percentage point higher than last year.
In December 2017, the total value of imports and exports was 2,706.5 billion yuan, up by 4.5 percent year-on-year. Of this total
- the value of exports was 1,534.2 billion yuan, up by 7.4 percent; and
- the value of imports was 1,172.2 billion yuan, up by 0.9 percent.
7. The Consumer Price Rose Mildly and the Producer Prices for Industrial Goods Shifted from Decrease to Increase.
In 2017, the consumer price index went up by 1.6 percent over last year, 0.4 percentage point slower than last year. Specifically, the price went up by 1.7 percent in urban areas and up by 1.3 percent in rural areas.
Grouped by commodity categories, prices for food, tobacco and liquor went down by 0.4 percent; clothing up by 1.3 percent; residence up by 2.6 percent; household facilities, articles and services up by 1.1 percent; transportation and communications up by 1.1 percent; education, culture and recreation up by 2.4 percent; health care and medical services up by 6.0 percent; and miscellaneous goods and services up by 2.4 percent. In terms of food, tobacco and liquor prices, grain went up by 1.5 percent, pork down by 8.8 percent and fresh vegetables down by 8.1 percent.
In December, the consumer prices went up by 1.8 percent year-on-year, or up by 0.3 percent month-on-month. In 2017, the producer prices for industrial products went up by 6.3 percent compared with last year, putting an end to the 5-year decrease since 2012; the year-on-year growth in December was 4.9 percent and the month-on-month growth was 0.8 percent.
In 2017, the purchasing prices for industrial producers were up by 8.1 percent over last year and in December, it was up by 5.9 percent year-on-year and up by 0.8 percent month-on-month.
8. The Growth of Resident Income Accelerated and the Income of Rural Residents Grew Faster than Urban Ones.
In 2017, the nationwide per capita disposable income of residents was 25,974 yuan, a nominal growth of 9.0 percent over last year, or a real increase of 7.3 percent after deducting price factors, 1.0 percentage point faster than last year.
In terms of permanent residents, the per capita disposable income of urban households was 36,396 yuan, a real growth of 6.5 percent after deducting price factors. The per capita disposable income of rural households was 13,432 yuan, up by 7.3 percent in real terms after deducting price factors. The per capita income of urban households was 2.71 times of the rural households, 0.01 less than last year. The median of the nationwide disposal income was 22,408 yuan, a nominal increase of 7.3 percent. Taking the per capita disposable income of nationwide households by income quintiles, that of the low-income group reached 5,958 yuan, the lower-middle-income group 13,843 yuan, the middle-income group 22,495 yuan, the upper-middle-income group 34,547 yuan, and the high-income group 64,934 yuan.
In 2017, the nationwide per capita consumption expenditure was 18,322 yuan, a nominal increase of 7.1 percent, or a real increase of 5.4 percent after deducting price factors. The number of rural migrant workers in 2017 totaled 286.52 million, which was 4.81 million more than last year, or up by 1.7 percent. Specifically, the numbers of local and outside migrant workers were 114.67 million and 171.85 million respectively, up by 2.0 and 1.5 percent. The average monthly income of migrant workers was 3,485 yuan, up by 6.4 percent over last year.
9. The Supply-Side Structural Reform was Further Pushed Forward and the Transformation and Upgrading Made New Achievements.
The efforts of cutting overcapacity, reducing inventory, deleveraging, lowering costs and strengthening weak areas were enhanced firmly. The industries of steel and coal have successfully fulfilled the annual task of cutting overcapacity. The national industrial capacity utilization rate reached 77.0 percent, the highest over the past five years. The inventories of commercial buildings continued to decrease, and at the end of December, the floor space of commercial buildings for sale was 106.16 million square meters less than that at the end of 2016. The leverage ratio of industrial enterprises continued to decrease. At the end of November, the asset-liability ratio of industrial enterprises above the designated size was 55.8 percent, 0.5 percentage point lower than the same period last year. The cost of enterprises continued to decrease. For the first eleven months, the cost for per-hundred-yuan turnover of principal activities of the industrial enterprises above the designated size was 85.26 yuan, 0.28 yuan less compared with the same period last year. Investment in weak areas grew rapidly. In 2017, investment in ecological protection and treatment of environmental pollution, management of water conservancy and agriculture went up by 23.9 percent, 16.4 percent and 16.4 percent over last year, or 16.7, 9.2 and 9.2 percentage points faster than the total investment.
The innovation-driven development continued to gain momentum and the new driving forces grew rapidly. In 2017, the number of newly registered enterprises nationwide was 6.074 million, up by 9.9 percent over last year, an average of 16.6 thousand each day. A number of major achievements were scored in science and technology, such as aerospace, artificial intelligence, deep sea exploration and biological medicine. New industries and products were booming. The value added of industrial strategic emerging industries grew by 11.0 percent compared with last year, 4.4 percentage points faster than the industries above the designated size; the production of industrial robots grew by 68.1 percent compared with last year, and that of new energy vehicles by 51.1 percent. The economic structure continued to be optimized. In 2017, the contribution of the value added of the tertiary industry to GDP accounted for 58.8 percent, 1.3 percentage points higher than last year. Consumption became the major driving force for economic growth. The contribution of the final consumption expenditure to GDP accounted for 58.8 percent, 26.7 percentage points higher than the gross capital formation. Green development was solidly promoted. The energy consumption per 10,000 yuan worth of GDP went down by 3.7 percent over last year.
10. Population Increased Steadily with Continuous Increase of Urbanization Rate
By the end of 2017, the total population of mainland China was 1,390.08 million (including the population of 31 provinces, autonomous regions and municipalities, and servicemen in CPLA; but not including residents in Hong Kong SAR, Macao SAR and Taiwan Province and overseas Chinese), an increase of 7.37 million over that at the end of 2016.
In 2017, the number of births was 17.23 million and the birth rate was 12.43 in a thousand; the number of deaths was 9.86 million with a death rate of 7.11 in a thousand; the natural growth rate was 5.32 in a thousand.
In terms of gender, the male population was 711.37 million, and female population was 678.71 million; the sex ratio of the total population was 104.81 (the female is 100).
Population at the working age of 16-59 was 901.99 million, accounting for 64.9 percent of the total population; population aged 60 and over was 240.90 million, which was 17.3 percent of the total population; population aged 65 and over was 158.31 million, accounting for 11.4 percent of the total population.
In terms of urban-rural structure, the usual residents in urban areas was 813.47 million, an increase of 20.49 million over the end of last year; and the usual residents in rural areas was 576.61 million, a decrease of 13.12 million. The proportion of the urban population to the total population (urbanization rate) was 58.52 percent, 1.17 percentage points higher than that at the end of 2016. The population who reside in areas other than their household registration and have been away from there for over 6 months reached 291 million, which was 0.98 million less than last year. Specifically, the floating population was 244 million, or 0.82 million less than that at the end of 2016. At the end of 2017, the total number of employed persons was 776.40 million and the number of urban employed persons was 424.62 million.
In 2017 the national economy has maintained the momentum of stable and sound development and exceeded the expectation with firm steps taken to secure a decisive victory in building a moderately prosperous society in all respects. We should also be aware that there are still difficulties and challenges confronting the economy and the improvement of quality and efficiency remains a daunting task. At the next stage, we should rally closer around the CPC Central Committee headed by Xi Jinping as the core, take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guideline, deeply implement the spirit of the 19th National Congress of the Communist Party of China and the Central Economic Working Conference, adhere to the general working guideline of making progress while maintaining stability, stick to the new development philosophy and grasp the evolution of the principal contradiction facing Chinese society. We should comply with the requirements for high quality development, promote balanced economic, political, cultural, social and ecological progress, coordinate the implementation of the four-pronged comprehensive strategy, deepen the supply-side structural reform, coordinate the efforts in stabilizing growth, stimulating reform, adjusting structure, benefiting people’s livelihood and fending off risks, take tough steps to forestall and defuse major risks, carry out targeted poverty alleviation and prevent and control pollution, and promote sustained and sound development of the economy and society. “
National Bureau of Statistics, “National Economy Maintained the Momentum of Stable and Sound Development and Exceeded the Expectation“, 18 Jan 2018 More
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
^ Shanghai CSI300 movements over the past week Chart: Google Finance