Econintersect: The official PMI (Purchasing Managers' Index) reported a reading ot 51.1 in August 2014, down from 51.7 in July. The result was slightly less than the expected value of 51.2. The second PMI report was just barely above the 50 reading which marks the boundary between expansion and contaction. The HSBC/Markit survey reported a final reading of 50.2, a sharp decline from July when it also came in at 51.7.
It is not uncommon for the two PMI results to give different readings. The official government survey covers large, mostly government owned enterprises while HSBC surveys medium and small sized companies which are largely privately owned. The HSBC survey is considerd to be more sensitive to China's exports which have been reported to be relatively strong recently.
Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC commented on the HSBC/Markit assessment of Chinese manufacturing:
"The HSBC China Manufacturing PMI eased slightly to 50.2 in the final reading for August from the flash reading of 50.3.The revisions were mixed, with upward revision to the new export orders and output sub-indices but downward revisions to the employment and input prices indices. Although external demand showed improvement, domestic demand looked more subdued. Overall, the manufacturing sector still expanded in August, but at a slower pace compared to previous months. We think the economy still faces considerable downside risks to growth in the second half of the year, which warrant further policy easing to ensure a steady growth recovery."
- China Loses Growth Momentum as Manufacturing Pulls Back (Xiaoqing Pi, Bloomberg)
- China: August Manufacturing Slump (GEI News, 21 August 2014)
- China July exports jump, but domestic economy still a worry (Reuters, 08 August 2014)
- Operating conditions improve at slowest pace in three months (HSBC Purchasing Managers’ Index™ Press Release, Markit)
- China Manufacturing PMI (Trading Economics, 01 September 2014)