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29 May 2013
Flash: Eyes on official Chinese PMI - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman EM Strategist Ilan Solot notes that this Saturday, China will report the official PMI reading for May.
He adds that after the weak China HSBC PMI reported overnight, markets will be looking for a weak official PMI reading too. Further, he comments that official manufacturing PMI was 50.6 in April, HSBC PMI was below 50 from July 2011 through October 2012, with only October 2011 showing a reading above 50. During that same period, he notes that official PMI was below 50 only three months and so tends to overstate strength in China manufacturing. He writes, “As such, it's possible that the official PMI reading comes in above 50 this month. But the softening in China growth is clear, and so any relief from the official PMI is likely to be fleeting. Indeed, official comments recently are clearly trying to prepare markets for slower China growth ahead. Yet USD/CNY is making new lows, confounding our expectations for a steady to weaker currency.”
He adds that after the weak China HSBC PMI reported overnight, markets will be looking for a weak official PMI reading too. Further, he comments that official manufacturing PMI was 50.6 in April, HSBC PMI was below 50 from July 2011 through October 2012, with only October 2011 showing a reading above 50. During that same period, he notes that official PMI was below 50 only three months and so tends to overstate strength in China manufacturing. He writes, “As such, it's possible that the official PMI reading comes in above 50 this month. But the softening in China growth is clear, and so any relief from the official PMI is likely to be fleeting. Indeed, official comments recently are clearly trying to prepare markets for slower China growth ahead. Yet USD/CNY is making new lows, confounding our expectations for a steady to weaker currency.”