North Asian PMIs bounce

It’s been a big day for North Asian PMIs. South Korea, China, Taiwan and Japan on Monday all show pretty good bounces off recent lows. At this stage only Japan is expanding but all have turned the corner from the slide that was underway in the last quarter of last year.

First China, where two PMIs are out today. The HSBC PMI (the flash reading was out two weeks ago) remains subdued:

The After adjusting for seasonal variation, the HSBC Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy – registered 48.8 in January, broadly unchanged from December’s reading of 48.7, and a level indicative of a moderate deterioration in Chinese manufacturing sector conditions.

Export orders rose slightly. Nothing is ever simple in Chinese data, though, and the official PMI was also released showing a better headline number but much worse internals, especially exports:

Component subindexes Jan Dec
Output 53.6 53.4
New orders 50.4 49.8
New export orders 46.9 48.6
Backlog of orders 43.2 46.6
Stocks of finished goods 48.0 50.6
Quantity of purchases 50.2 50.9
Imports 46.9 49.1
Input prices 50.0 47.1
Stocks of purchases 49.7 48.3
Employment 47.1 48.7
Suppliers’ delivery time 49.7 50.1

Take you pick on which index you privilege but the official version is strongly suggesting internal demand for Chinese manufacturing.

That would also fit with what we are seeing in the other North Asian economies. First, South Korea saw its PMI posting 49.2, up from December’s reading of 46.4:

And the decline in exports orders is slowing:

South Korean manufacturers reported a further reduction in new business received during January, with decreases now registered in each month since August 2011. Continued reports of worsening economic conditions and reduced capacity at clients were reported by panellists as the main factors contributing to the decline in new work intakes. However, the latest contraction in new order volumes eased markedly since December. Similarly, the extent to which new export business fell was weaker than in the previous survey period.

The same pattern is apparent in Taiwan:

The HSBC Taiwan PMI – a composite indicator designed to provide a single-figure snap-shot of the health of the manufacturing sector – posted 48.9 in January, up from 47.1 in December. The latest reading pointed to an eighth successive month of worsening business conditions. However, the rate of deterioration eased for the third survey period running, and was only marginal.

Manufacturers in Taiwan reported a further decline in new business received during January, attributing this to weaker demand, both at home and overseas. However, the rate of reduction slowed to the weakest since June 2011. Similarly, the fall in new export orders also eased, with the latest decrease the weakest in the current seven-month period of contraction.

And two days ago, Japan:

At 50.7, up from 50.2 in December, the headline seasonally adjusted Markit/JMMA Purchasing Managers’ Index signalled a second successive month-on-month improvement in manufacturing sector operating conditions. The latest index reading was nonetheless consistent with only a marginal rate of growth.

Manufacturing production in Japan rose for the first time in three months during January, although the pace of increase was modest. Where a rise in factory output was recorded, this was commonly linked by panellists to higher new order intakes.

January data signalled a rise in new business received by Japanese manufacturing firms, ending a four-month period of decline. However, the pace of expansion in new work was slight. Companies that noted growth of new orders attributed this to better client demand from both domestic and external markets. Furthermore, new export business rose at a negligible rate, with the index measuring trends in new export orders posting above the 50.0 no change mark for the first time in 11 months.

So, something encouraging is going on up there. None of these nations have done a whole lot of stimulating, at least, not of the monetary variety. Except China, which has done some targeted easing. The smaller nations PMIs are heavily linked to exports so my guess is that we’re seeing some lingering demand in China, seasonally adjusted for the NY holiday and perhaps also some spillover from the post-Christmas US restocking, which will fade quickly in my view given their inventory rebuild is largely done.

I’m not breaking out the champagne but this certainly continues the good run of recent industrial data and there’s little sign of a hard landing in North Asian industry at this point.

Taiwan