China flash PMI offers hope

From Bloomberg on China, the HSBC ‘flash’ PMI:

  • August PMI preliminary reading at 49.8; output index at 49.4 also rebounds from last month’s 48.
  • July HSBC PMI final reading was 49.3, 1st contraction in yr
  • New orders, new export orders, employment may contract: HSBC
  • NOTE: China reported July manufacturing PMI at 50.7, lowest reading since Feb. 2009
  • Reading picked up slightly to close to break-even mark, which is still consistent with IP growth, HSBC chief economist Hongbin Qu says in statement
  • Data suggest hard landing risk is still remote, providing leeway for PBOC to keep current tightening measures in place: Qu
  • Australia’s dollar rises after China’s August manufacturing index improves to 49.8
  • Euro strengthened against dollar to $1.4384 as of 11:40 a.m. in Tokyo from $1.4358 in New York yesterday

In short, Chinese manufacturing shrinks more slowly. This is potentially important. The huge fall in the Philly Fed was for August. That China has not obviously succumbed immediately is cause for hope. Though being at the far end of the supply chain may mean some delay in the flow through.

David Llewellyn-Smith
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  1. Sandgroper Sceptic

    Rather than US/Europe driven, is this related to electricity output? I keep hearing from my Chinese contacts that electricity demand greatly exceeds supply and inudstrials (manufacturing) keep being asked to shift demand to off peak periods.

    The other thing it might represent is some punting on a stronger Christmas, most HK manufacturers and wholesalers were busy ordering their last Xmas stock in August.

  2. So bullet was dodged “again” this month on tail wags the dog Chinese data. But under what possible scenario does the whole global economic mess improve by next month, or next quarter, or next year?

  3. When China stops building empty offices and roads to nowhere it will be interesting to see these readings.