The China flash HSBC PMIs missed for April, staying barely positive at 50.5 and providing little encouragment for those hoping that the first quarter GDP growth was an anomaly. Here’s the table of main index components:
Only backlogs of work is unequivocally positive, and that’s a change of direction from slightly negative to slightly positive. Most concerning is probably the new orders and new export orders, which had been ticking along above 50 for much of the past six months:
Societe Generale’s spider web chart underlines how it’s a mostly negative picture:
The PMI components have often revealed a mixed bag over the past year or so, but this one seems fairly consistent.
Nomura’s Zhiwei Zhang points out that in the context of previous April results, it’s especially poor:
In the past seven years, the PMI in April has risen five times, fallen once and been flat once – on average, it rose by 1.2 percentage points (pp) from March to April. Excluding 2009 (an abnormal year when the RMB4trn fiscal stimulus pushed it up quickly), it rose by 0.5pp.
On the other hand, Zhang points out that the flash MNI business sentiment survey, to which he’s partial, rose in April to 59.3 from a final reading of 58.2 in March. Regardless of both, he’s maintaining forecasts of a slowing growth trajectory through the rest of the year.
Societe Generale’s Wei Yao is not impressed with the whole HSBC/Markit manufacturing PMI just now:
This HSBC PMI series has been very jumpy. Between Q4 2011 and Q3 2012, it was rangebound between 48 and 50; and afterwards, it moved up to fluctuate between 50 and 52. Filtering out some of the month-to-month volatility, it was consistent with the official survey but seemed to lag from time to time. This pattern supports our view that the official PMI report is becoming more informative.
As Yao points out, the latest flash HSBC figure is similar-ish to the official figure of 50.9 for March. Just yesterday we cited some comments that the official PMI method has changed three times in the past year, with little explanation of how it’s adjusted for. Perhaps they’ve all been improvements?
Related links:
China’s post-modern macro data (or, when Q1 is not Q1) – FT Alphaville
China’s recovery falters as manufacturing growth cools – Bloomberg