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PMIs Reinforce Outperformance Theme

CHINA
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We noted late last week that China's PMI prints may reinforce the China outperformance theme (see this link for more details). Today's non-manufacturing PMI printed much stronger than expected, coming in at 54.7 versus 50.5 expected and is back to close to highs from May of last year. The manufacturing PMI missed estimates (50.2 versus 50.5 expected), although it still managed to move back into expansionary territory.

  • The surprising aspect of today's result is the extent of the non-manufacturing PMI bounce, particularly given on-going covid related restrictions observed during June.
  • In any case, today's outcomes should be enough to push the Citi China Economic Activity Surprise Index (EASI) higher. The chart below plots the China EASI versus the US EASI, which have crossed over recently.

Fig 1: Citi China & US EASI Trends - Crossing Over

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We noted late last week that China's PMI prints may reinforce the China outperformance theme (see this link for more details). Today's non-manufacturing PMI printed much stronger than expected, coming in at 54.7 versus 50.5 expected and is back to close to highs from May of last year. The manufacturing PMI missed estimates (50.2 versus 50.5 expected), although it still managed to move back into expansionary territory.

  • The surprising aspect of today's result is the extent of the non-manufacturing PMI bounce, particularly given on-going covid related restrictions observed during June.
  • In any case, today's outcomes should be enough to push the Citi China Economic Activity Surprise Index (EASI) higher. The chart below plots the China EASI versus the US EASI, which have crossed over recently.

Fig 1: Citi China & US EASI Trends - Crossing Over

Keep reading...Show less