Digger sales may give early hint of rebound

The high profile data releases of the last week have provided little evidence that growth in China is picking up, even though credit has now been expanding at a rapid pace for several months. But there are glimmers of hope in less closely-watched measures. One worth monitoring is April’s pick-up in sales of diggers and earth-moving equipment. Back in 2009, it took about six months for a turnaround in credit to be reflected in construction equipment sales. We argued then that these sales were a better measure of investment activity, particularly in infrastructure, than the flawed fixed investment data. Further increases in sales in the next month or two would provide strong evidence that a turnaround in activity was finally getting underway.