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Chinese January manufacturing PMI ahead of forecasts, as rumoured

Date: Wednesday 01 Feb 2012

Chinese January manufacturing PMI ahead of forecasts, as rumoured

-Output and new business both decline for a third month in succession -HSBC
-Purchasing down at the sharpest rate in 34 months -HSBC
-Companies again report lower average costs and output charges -HSBC
-There were rumours yesterday regarding a better than expected PMI reading.

The HSBC China manufacturing purchasing managers’ index (PMI) for the month of January has come in at 48.8, in line with preliminary estimates.

However, the official PMI data also published today have come in a tad ahead of expectations, with the headline index at 50.5 (Consensus: 49.6).

Nonetheless, while the output gauge in the official survey rose to 53.6, to the highest level since May, readings for new export orders and imports contracted for a fourth month.

As well, even the Chinese statistics bureau indicated that the Lunar New Year helped to give a boost to consumption and hence, it is thought by many, to demand for the sector’s goods.

Also worth commenting, the Lunar New Year holiday fell in January this year, a month earlier than in 2011, which according to some analysts may have led to ‘problems’ with the seasonal adjustment factors and helps explain the moderate rise in the PMI.

Lastly, and worth noting when gauging the market’s reaction to the data, there were rumours already doing the rounds yesterday regarding a possible ‘up-side’ surprise in the Chinese data.

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

“The final results of January’s PMI survey confirmed the still weak growth momentum of manufacturing activities into the New Year, despite the upside surprise of December IP growth due to the front-loaded production ahead of the early Chinese New Year. This calls for more aggressive easing measures to support growth, given that inflation is no longer a concern. Once filtering through, the policy easing should secure a soft-landing in 2012. But the first quarter is likely to be tough, with GDP growth likely to slow to around 8% y-o-y in 1Q from 8.9% in 4Q11.”

AB

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