China's HSBC Flash PMI Inches Forward; Suggests Additional Stimulus Forthcoming
January 19, 2012
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China Economic Update: HSBC’s “Flash” Purchasing Managers’ Index
HSBC’s Flash Purchasing Managers Index or PMI for China, which is the month’s earliest indicator of China’s manufacturing activity, showed that activity remained in contraction mode in January.
The Flash index was reported at 48.8 for January, which is up from December’s final reading of 48.7 and at a three month high. (November: 47.7, October: 51.1, September: 49.1, August: 49.0, July: 49.3, June: 50.1).
New export orders improved on the month as the component index came in at 51.1.
According to Reuters, New orders overall ticked to a three-month high, but failed by a narrow margin to get back above the all-important 50 level.
Recall that readings above 50 indicate the sector is expanding while readings below 50 are indicative of contraction.
In a statement released alongside the index, Qu Hongbin, HSBC’s chief economist on China said, "The third consecutive below-50 reading of the manufacturing PMI suggested that growth is likely to moderate further."
Qu added, "Despite the upside surprise of industrial production growth in December, the ongoing slowdown of investment and exports implies more headwinds to growth and likely destocking pressures for manufacturers in the coming months. We expect more policy easing to stabilize growth."
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