Economic Data Distorted by Different Times of Chinese New Year

Economic Data Distorted by Different Times of Chinese New YearThe latest macro data in China shows a disappointing manufacturing activity index that worried people on the trend of softening growth momentum and a shaky start if the Chinese economy of the year 2014. Financial analysts said that the market needs to treat China’s monthly macro date for January and February cautiously since traditionally it’s still distorted by the effect of the Chinese New Year that is difficult to remove statistically due to a short sample period along with floating dates.

Manufacturing activity index or purchasing managers index is so far the first and the important indicator that measure China’s factory activities and the country’s manufacturing based economy by the start of 2014. Official PMI for January showed noticeable declines compared to December. The decline continued on to January which indicated the lowest factory activity since August due to the weak output and new orders.

The deterioration of the headline PMI reflects largely the weaker expansion of both the output and new business for January as firms were cutting down on their staffing levels at the quickest ways possible since March. Growth concerns on China are increasing and the market make see a overreaction to weak data for January sine the year over year macro date in January/February are distorted by different timing of the lunar new year. This year was nothing different as the Chinese New Year started on January 31 but started on February 10 last year.

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