Chinese PMIs go boom! Or do they?

From the NBS:

In March , China’s manufacturing purchasing manager index ( PMI ) was 52.0% , a 16.3 % increase from the previous month .

From the perspective of enterprise scale, the PMIs of large, medium and small enterprises were 52.6% , 51.5% and 50.9% respectively , up 16.3 , 16.0 and 16.8 percentage points from the previous month .

From the perspective of the classification index, among the five classification indexes constituting the manufacturing PMI , the production index, new order index, and employment index all rose above the critical point, and the raw material inventory index and supplier delivery time index were below the critical point.

In March , the non-manufacturing business activity index was 52.3% , an increase of 22.7 percentage points from the previous month .

In view of different industries, the service industry business activity index was 51.8% , an increase of 21.7 percentage points from the previous month . In terms of industries, except for capital market services, business activity indexes in other industries have rebounded to varying degrees. The business activity index of the construction industry was 55.1% , an increase of 28.5 percentage points from the previous month .

The new orders index was 49.2% , an increase of 22.7 percentage points from last month , indicating that the decline in non-manufacturing market demand has narrowed. In view of different industries, the new orders index of the service industry was 49.3% , an increase of 22.3 percentage points from the previous month ; the new order index of the construction industry was 48.4% , an increase of 24.6 percentage points from the previous month .

Looks good, no?

Problem is, PMIs are directional indexes. Things are either getting better or worse. They do not measure from what level.

Of course things improved in March from February as the economy reopened. That the rate of improvement was so godawful slow is the real message here.

I’d expect the PMIs to shoot well above 60 very quickly and stay there for many months if China has any chance of resuming previous productions levels.

David Llewellyn-Smith
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