China: PMI Improves Sharply but Still Below 50

October 24th, 2012
in econ_news, syndication

Econintersect:  The HSBC (Hong Kong and Shanghai Bank, NYSE:HBC) preliminary PMI (Purchasing Managers' Index) reading for October has risen to 49.1 in October, up from 47.9 for the final reading for breaking-news-130pxSeptember.  The early reading, referred to as the flash PMI, indicates contraction if below 50, which is where the index has been for a full year now.  The reading for October is a rebound from a two month low that had not been seen since the bottom of the Great Recession in 2009.  This higher reading is likely to defer any further interest rate cuts by the PBoC (People's Bank of China, the country's central bank).  The benchmark interest rate has been cut twice in 2012 and now stands at 6%.  These were the first interest rate cuts since 2008 during the financial crisis.

Follow up:

China has two PMI, the one from HSBC covers primarily small and medium privately held businesses which are sensitive to the export trade.  The second, which is the official PMI from the government, covers large and mostly state owned enterprises.  This index has been stronger than the HSBC PMI over the past year and has been below 50 only twice during that time - the last two months (August and September).  Both indexes will report final readings for October next week.  There is no preliminary reading for the government PMI.

John Lounsbury


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1 comment

  1. andi Email says :

    let us take a look for the report final readings for next week



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