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Both Manufacturing & Services PMIs Expected Back In Expansion Territory


A reminder that tomorrow delivers the official manufacturing and non-manufacturing PMIs for Jan. The market is looking for a steep improvement, particularly in the non-manufacturing/services index, see the chart below. The consensus sits at 52.0, versus 41.6 in Dec. For manufacturing the consensus is 50.0 versus 47.0 in Dec.

  • The range of expectations is quite wide, 45.0 to 53.3 for services, 48.5 to 52 for manufacturing.
  • The anecdotes pointed to a noticeable improvement in activity through January as Covid cases subsided. Mobility indicators picked up, while spending and travel activity picked up through the LNY period, albeit not quite to pre Covid levels of 2019 (see this link for more details).
  • How this translates into the PMIs remains to be seen, with an improvement obviously expected, but the risk of supply related disruptions something that can't be discounted.
  • It's likely that China data will start to have more of impact now that we are clear of the Covid wave, and the market starts to assess how growth momentum is shaping up in the first part of 2023.
  • China markets largely ignored disappointing data through Nov/Dec as it focused on the 2023 outlook following the pivot away from CZS.

Fig 1: China PMIs Expected To Rebound Sharply For January

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