Caixin PMI Rise Inconsistent With Official PMI, China Related Assets Pare Gains

The Caixin PMI print puts the index back at 50.9, comfortably above the 50 expansion/contraction point, albeit still below recent highs in Feb of 51.6. In terms of the detail, the output sub-index rose to 53.8 from 50.2 in April. This is the highest print for this sub-index since June 2022. New orders were also up from the prior month.

• The Caixin survey tends to focus more on small and medium sized enterprises and gives a somewhat inconsistent reading with yesterday's official manufacturing PMI. This survey showed conditions deteriorated in May for such enterprises (47.6 from 49.2 for medium enterprises, 47.9 from 49.0 for small enterprises).
• The survey firms also tend to more export orientated, which again is somewhat inconsistent with the trends in external seen elsewhere in the region and across the globe.
• Still, an upside surprise runs the recent run of downside surprises and may halt any further downgrades of the growth outlook, at least in the near term. Note we get the Caixin services and composite PMI readings next Mon, followed by trade data on Wed.
• China related assets have responded positively to the print, although there hasn't been much follow through. HK equities are back close +0.50%, against earlier gains of +1%. USD/CNH is back above 7.1100, against post data lows close to 7.1020. AUD and NZD gains have also slipped.