March 30, 2023 03:22 GMT
PMIs Expected To Move Down Off February Highs
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A reminder that official China PMIs for March print tomorrow. The market expects a pull back in both readings, with manufacturing forecast at 51.6 (prior 52.6, forecast range 50.5-53.0). For non-manufacturing or services, the market expects a 55.0 reading (prior 56.3, forecast range 53.0-57.0).
- Recall that at the start of March, the Feb PMI prints surprised on the upside and kicked off a wave positive China asset related sentiment, albeit which was fairly short lived.
- A pull back in the manufacturing PMI is in line with the down tick in the emerging industries PMI, which has already printed for March (see the first chart below). The emerging industries PMI tracks China's high tech sector.
- If the consensus is right it would still leave the manufacturing sector comfortably in expansion territory. Also note that China Premier Li stated at the Boao forum today that the economic situation in March is even better than January/February.
Fig 1: China Manufacturing PMI Versus Emerging Industries PMI
Source: MNI - Market News/Bloomberg
- On the services side, some pull back from the heady Feb levels arguably wouldn't be a surprise. The Standard Chartered China SME index continued to recover in March, although the non-manufacturing sector PMI is already at levels higher than implied by this index.
Fig 2: China Non-Manufacturing PMI Versus Standard Chartered China SME Index
Source: Standard Chartered, MNI - Market News/Bloomberg
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