2 May 2016
China: April official PMI dips, but remains above 50 - Nomura
The Asia Economics Team at Nomura offered their take on the latest Chinese PMI, published over the weekend, and coming at 50.1, noting that despite the dip, it remains above the expansion/contraction threshold of 50.
Key Quotes
The official PMI edged down to 50.1 in April from 50.2 in March; this was weaker than expected (Consensus and Nomura: 50.3) but still above the expansion/contraction threshold of 50. By component, the output and new orders sub-indices ticked down by 0.1 percentage points (pp) and 0.4pp, respectively, to 52.2 and 51.0 in April. The export new orders sub-index also ticked down by 0.1pp but remained above the 50 threshold.
The only sub-index to rise in April was the purchasing price sub-index, which rose to a 59-month high of 57.6 and implies a continued easing of deflationary pressures on the supply side. Despite the dip, the April official PMI and its major sub-indices (the output and new orders) remained above the expansion/contraction threshold of 50.
This is largely consistent with message from other leading indicators (the MNI business sentiment index and the Minxin manufacturing SME PMI), which suggested a stabilisation of or slight improvement in growth momentum in April, although we believe it will be a shortlived one. We continue to expect a gradual slowdown over the rest of this year, with annual GDP growth at 6.2%.
Key Quotes
The official PMI edged down to 50.1 in April from 50.2 in March; this was weaker than expected (Consensus and Nomura: 50.3) but still above the expansion/contraction threshold of 50. By component, the output and new orders sub-indices ticked down by 0.1 percentage points (pp) and 0.4pp, respectively, to 52.2 and 51.0 in April. The export new orders sub-index also ticked down by 0.1pp but remained above the 50 threshold.
The only sub-index to rise in April was the purchasing price sub-index, which rose to a 59-month high of 57.6 and implies a continued easing of deflationary pressures on the supply side. Despite the dip, the April official PMI and its major sub-indices (the output and new orders) remained above the expansion/contraction threshold of 50.
This is largely consistent with message from other leading indicators (the MNI business sentiment index and the Minxin manufacturing SME PMI), which suggested a stabilisation of or slight improvement in growth momentum in April, although we believe it will be a shortlived one. We continue to expect a gradual slowdown over the rest of this year, with annual GDP growth at 6.2%.