China: Flash PMI Up Again

Econintersect:  For the second month in a row the HSBC PMI for China is showing an expanding manufacturing sector.  From the HSBC/Markit press release:

Key points

• Flash China Manufacturing PMI™ at 50.9 (50.5 in November). Fourteen-month high.

• Flash China Manufacturing Output Index at 50.5 (51.3 in November). Two-month low.

Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:

“As December flash manufacturing PMI picked up further to a 14 month high, it confirmed that China’s ongoing growth recovery is gaining momentum mainly driven by domestic demand conditions. However, the drop of new export orders and the downside surprise of November exports growth suggest the persisting external headwinds. This calls for Beijing to keep an accommodative policy stance to counter-balance the external weakness, provided inflation stays benign.”

Here is the summary table from the press release:

The optimistic reaction to the Flash PMI number must be muted when the following graphs from HSBC/Markit are examined:

It is clear that manufacturing activity is struggling at the demarcation area between expansion and contraction.  The improvement month-to-month is noted but a trend for improvement is far from established.

The HSBC Flash China Manufacturing Purchasing Managers’ Index™ (PMI™) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

John Lounsbury

Source:

• Operating Conditions continue to improve in December (HSBC Purchasing Managers’ Index™ Press Release, 14 December 2012)