Comparing China’s PMIs

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The official PMI and HSBC/Markit PMIs are known to have shown divergences, sometimes huge. The following two charts show some selected data points from the different PMIs.

The first one is the headline PMI figures. The official PMI has been showing consistently better readings compared with HSBC/Markit for the best part of a year. In fact, HSBC/Markit China manufacturing PMI has been below 50 for 11 straight months, while the official PMI has only fallen below 50 for 2 months. Nevertheless, the divergence has narrowed.

The second difference is the new orders minus inventory measures. HSBC/Markit PMI show post-crisis low in this measure for August, and remains negative for September. Remarkably, however, the official PMI shows positive numbers for the last 3 months.

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One shows inventories falling fast enough to offset declines in demand. The other does not. Take your pick.