HSBC/Markit Flash China manufacturing PMI points to moderation of contraction in July24 July, 2012, 11:23. Posted by Zarathustra
HSBC/Markit flash estimate of China manufacturing PMI for July continues to signal contraction, albeit with slight improvement. Headline PMI increased from 48.2 of the final estimate for June to 49.5, a five-month high, points to a moderation of the contraction in manufacturing sector. The output component goes above 50 to a 9-month high at 51.2.
New orders and new export orders continue to be below 50, although the pace of contraction has moderated. However, employment contracts at a faster rate (consistent with the story that migrant workers are returning home as job losses mount). The good news on top of the slight improvement is that stocks of finished goods has contracted this time round.
The table below shows the internal components of the HSBC/Markit PBOC
The chart below slows the HSBC/Markit PMI and the official PMI.
Source: NBS, HSBC/Markit
Overall, this is not a bad report, even though it is far from good. The pace of the contraction has been moderated, and it remains to be seen if manufacturing will continue to pick up in the coming months. For the time being, however, we believe it could well be taken by the market as an evidence of the “second quarter bottom” of the Chinese economy.