19 Jun 2015
Chinese MNI business sentiment rises further in June, PBoC expected to ease – Nomura
FXStreet (Barcelona) - Economists at Nomura, review the China MNI business sentiment index data release, and further share their outlook for GDP growth and policy easing for the economy.
Key Quotes
“The MNI business sentiment index rose further in June, by 3.8 percentage points (pp) to 53.5 from 49.7 in May, against an historical average decline of 3.9pp from May to June over 2010-14.”
“As the first data point for June, the rise in the MNI index suggests growth momentum continues to improve after stabilising at a low level in May. We expect the HSBC flash PMI (due next Tuesday) to tick up to 49.3 in June from 49.2 in May.”
“We continue to expect real GDP growth to slow to 6.6% y-o-y in Q2 from 7.0% in Q1 due to last year’s high base, before edging up to 6.7% in Q3 and 6.8% in Q4.”
“We maintain our view that policy will be eased further to offset headwinds facing the economy. We maintain our call for two more 50bp cuts to the banks’ reserve requirement ratio and two more 25bp policy interest rates cuts over the rest of this year. Given more signs of growth momentum stabilising, we expect the People’s Bank of China to pause in June before resuming easing in July.”
Key Quotes
“The MNI business sentiment index rose further in June, by 3.8 percentage points (pp) to 53.5 from 49.7 in May, against an historical average decline of 3.9pp from May to June over 2010-14.”
“As the first data point for June, the rise in the MNI index suggests growth momentum continues to improve after stabilising at a low level in May. We expect the HSBC flash PMI (due next Tuesday) to tick up to 49.3 in June from 49.2 in May.”
“We continue to expect real GDP growth to slow to 6.6% y-o-y in Q2 from 7.0% in Q1 due to last year’s high base, before edging up to 6.7% in Q3 and 6.8% in Q4.”
“We maintain our view that policy will be eased further to offset headwinds facing the economy. We maintain our call for two more 50bp cuts to the banks’ reserve requirement ratio and two more 25bp policy interest rates cuts over the rest of this year. Given more signs of growth momentum stabilising, we expect the People’s Bank of China to pause in June before resuming easing in July.”