PMIs In Focus Next Week

Tomorrow delivers China industrial profits data for July. This is unlikely to be a market mover though. Greater focus will rest on August PMI prints, which come out on Wednesday.

• At this stage, the market expects the official manufacturing PMI to rise to 49.3 from 49.0 in July. The services (or non-manufacturing) PMI is expected to ease back to 52.3 from 53.8 last month.
• The relative divergence in expectations is not surprising given August saw a fresh Covid wave hit a number of China cities. No major cities were locked down, but case numbers were still above 3000 by the middle of the month before improving.
• In any case, such a backdrop would be expected to weigh more on the services backdrop relative to manufacturing, although power outages could also impact on this sector. The authorities have stated the current episode isn't as bad as last year's coal shortages.
• The Standard Chartered SME survey, which has already printed for August, eased back in the month to 51.30, from 52.16 in July, suggesting some loss of momentum. Still, we remain comfortably above the May trough of 48.50 for this index.
• The Caixin manufacturing survey prints on Thursday. The market expects a 50.1 print versus 50.4 in July.