China PMI Little Changed, Exports Contract

Econintersect: The official PMI (Purchasing Managers’ Index), with data collected by the government from large mostly governemnt owned companies, came in at 50.4 for April 2014, insignificantly changed from 50.3 in March.  Export orders drop sharply from a month earlier and employment showed continued contraction at 48.3, but new orders rose moderately.  The “Flash” (preliminary) reading of the HSBC/Markit PMI for smaller, privately held companies was announced last week at 48.3, a slight improvement from 48.0 in March.  The smaller companies are considered more sensitive to exports that the large companies.  Readings above 50 indicate expansion, below contraction.

Comments have been varied.   From Reuters:

Zhang Liqun, an economist at the Development Research Centre, which helps compile the PMI, said the PMI pointed to stabilizing economic growth ahead, but others disagreed.

Zhiwei Zhang, China economist at Nomura (Reuters):

“We do not believe the economy has passed a turning point.”

Zhang also said he expected second quarter GDP to slip from 7.4% in the first quarter to 7.1% in the second.

Shane Oliver, head of investment strategy and chief economist at AMP Capital (CNBC):

“The data is consistent with stabilization in the economy following the slowdown seen earlier this year.”

Ting Lu, chief China economist at Bank of America Merrill Lynch (CNBC):

… the data points to a potential improvement in domestic demand in the second quarter due perhaps to some of the recent growth supportive measures.

John Lounsbury

Sources:

• China PMI steadies, but doesn’t dispel growth worries (Kevin Yao, Reuters)

• China official PMI rises slightly to 50.4 in April (CNBC Staff, 30 April 2014))