PMIs Paint Positive Activity Backdrop, But Jobs Less Upbeat & Price Pressures Muted

The headline prints for the official PMIs continue to paint a near term positive backdrop for activity, albeit with a less positive employment picture and muted price pressures.

• The first chart below is the manufacturing PMI against IP growth and even with the pull back in the March PMI, it still suggests better IP momentum. The next IP print is out on April 18, the Jan-Feb data (which was out in mid March) coming in a touch below expectations (2.4% v 2.6% actual).
• The detail showed some easing conditions across components, with employment dipping back below the 50 expansion/contraction point (to 49.7, was 50.2 in Feb). New orders eased to 53.6 form 54.1, as did new export orders to 50.4 from 52.4.
• Still, the new export order reading is comfortably above levels that prevailed this time last year. Note March trade figures are due on April 13.
• On the price front, output prices eased to 48.6, from 51.2.

Fig 1: China IP Versus Manufacturing PMI

Source: MNI - Market News/Bloomberg

• The services side delivered a more impressive result. The second chart below plots this PMI against retail sales growth. This is fresh highs in this PMI back to 2011. The next retail sales print is also out on April 18.
• The detail showed new orders rise further to 57.3 (from 55.8), but employment slipped to 49.2 from 50.2. Selling prices also corrected back lower to 47.8 (from 50.8).

Fig 2: China Retail Sales Versus Non-Manufacturing PMI

Source: MNI - Market News/Bloomberg