Blog entry (here) from Also Sprach Analyst shows graphically the correlation between China quarterly GDP growth and Macau’s gross gaming revenue. Given that collecting macroeconomic data is costly and slow, the use of unconventional data helps supplement and increases our understanding of the current economy.
As stated in the article:
We started looking at Macau casino revenues as a possibly proxy for China’s economic growth earlier, as the chart below shows that they track each other well.
In this case, the ideal situation is to have slowing Chinese economic activities cause less traveling which then causes the reduction in Macau gaming revenue. However, the article also raises some issues with the Macau data. For example, the restriction of Chinese visa would have the same effects. I.e., less visas cause less traveling which then causes the reduction in gaming revenue. This results in misleading correlation if the visa restriction is unrelated to the economic downturn.
If the correlation is valid, then the strong relationship suggests that even if China does massage its economic data – it does so without being too obvious (drastic). For an anecdote, see this other blog entry from Also Sprach Analyst titled “Is China massaging macro data? (Ans: Yes).”
Reference: Macau casino revenue increased by 12.2% yoy in June [Also Sprach Analyst]