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20 Jun 2013
Flash: China HSBC flash PMI falls sharply in June - Nomura
FXstreet.com (Barcelona) - Nomura economist Zhiwei Zhang notes that the HSBC flash manufacturing PMI fell sharply to 48.3 in June from 49.2 in May, much weaker than expected (Consensus 49.1).
He adds that the new orders component fell further to 47.1 in June from 48.7 for a second sub-50 print. The production component fell to 48.8 from 50.7, the first month below 50 in eight months. Further, the new export orders component fell sharply to 44.0 from 48.9, casting more doubt over China´s export outlook. Both input and output prices remained sluggish below 50, suggesting weak production and weak demand for the manufacturing sector. he feels that the fall in the HSBC flash PMI reinforces his concerns over the downside risks to the economy.
Overall, he maintains his view that policy and liquidity will remain tight before the Q2 GDP data release on 15 July. He writes, “Headline activity indicators such as industrial production and fixed asset investment are weak but are not collapsing, while labour market conditions remain tight. We believe the government is committed to tolerating short-term pain to achieve its policy objectives – containing financial risks and secure sustainable growth in the long term.”
He adds that the new orders component fell further to 47.1 in June from 48.7 for a second sub-50 print. The production component fell to 48.8 from 50.7, the first month below 50 in eight months. Further, the new export orders component fell sharply to 44.0 from 48.9, casting more doubt over China´s export outlook. Both input and output prices remained sluggish below 50, suggesting weak production and weak demand for the manufacturing sector. he feels that the fall in the HSBC flash PMI reinforces his concerns over the downside risks to the economy.
Overall, he maintains his view that policy and liquidity will remain tight before the Q2 GDP data release on 15 July. He writes, “Headline activity indicators such as industrial production and fixed asset investment are weak but are not collapsing, while labour market conditions remain tight. We believe the government is committed to tolerating short-term pain to achieve its policy objectives – containing financial risks and secure sustainable growth in the long term.”