| Actual | Previous | Consensus | |
|---|---|---|---|
| Month over Month | 0.39% | 0.11% | |
| Year to Date on Y/Y Basis | 3.8% | 4.0% | 3.5% |
Highlights
Chinese fixed asset investment rose 3.8 percent year-to-date in June, slowing from growth of 4.0 percent in May but above the consensus forecast of 3.5 percent. Investment in infrastructure rose 7.2 percent on the year after a previous increase of 7.5 percent, while manufacturing investment increased 6.0 percent, as it did previously. Property investment was again weak, falling 7.9 percent after dropping 7.2 percent previously. In month-over-month terms, fixed asset investment rose 0.39 percent in June after advancing 0.11 percent in May.
Today's data were generally above expectations, resulting in an increase in the China ECDI from minus 57 to minus 16 and the ECDI-P from minus 60 to minus 3, indicating that data are underperforming market expectations to a lesser extent.
Today's data were generally above expectations, resulting in an increase in the China ECDI from minus 57 to minus 16 and the ECDI-P from minus 60 to minus 3, indicating that data are underperforming market expectations to a lesser extent.
Market Consensus Before Announcement
Fixed asset investment in June is expected to rise 3.5 percent. This would compare with 4.0 percent growth in May against expectations for 4.4 percent and against 4.7 percent growth in April.
Definition
Investment in fixed assets refers to the investment in construction and purchase of fixed assets by private and state-controlled domestic enterprises and households (excluding rural households) involving a total planned investment of CNY5 million yuan or more. Separate data for private investment and state-controlled investment are published as well as more detailed data on an industry basis.
Description
Investment in fixed assets is an important part of gross domestic product and also provides the additional productive capacity to an economy that is required to drive future growth. Strong growth in this category of spending indicates that enterprises are confident about future prospects and is generally associated with rising employment and incomes.
Investment in fixed assets therefore provides information about near-term and future economic growth. Investors need to closely track the economic growth because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.
Investment in fixed assets therefore provides information about near-term and future economic growth. Investors need to closely track the economic growth because it usually dictates how investments will perform. Investors in the stock market like to see healthy economic growth because robust business activity translates to higher corporate profits. Bond investors are more highly sensitive to inflation and robust economic activity could potentially pave the road to inflation. By tracking economic data such as GDP, investors will know what the economic backdrop is for these markets and their portfolios.
