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25 Jul 2014
HSBC China PMI: Growth momentum keeps building - Nomura
FXStreet (Bali) - As noted by Nomura Economists, the strong HSBC China PMI (18-month high) shows that growth momentum continues to build on the continued rollout of easing measures and some improvement in exports.
Key Quotes
"The HSBC flash PMI rose to 52.0 in July from a final June reading of 50.7, much stronger than expected (Consensus and Nomura: 51.0). This is a 1.3 percentage point (pp) increase, in contrast with the historical average of a 0.3pp decline in July (2005-2013, excluding 2009), but is in line with a strong increase in the July MNI business sentiment index."
"The improvement was across the board, with the new orders sub-index rising to 53.7 from 51.8 in June, the new export orders sub-index rising to 52.7 from 50.7 and the output sub-index rising to 52.8 from 51.8. There are also some signs of price pressures, with the input price sub-index rising to 52.9 from 51.3 in June and the output price sub-index rising to 51.0 from 49.9."
"The strong PMI data show that growth momentum continues to build this quarter on the continued rollout of easing measures and some improvement in exports. Our two proprietary indicators also suggest that the strength in growth continued into July. We maintain our forecast of growth at 7.5% y-o-y in Q3 and 7.6% in Q4, with upside risks to our Q3 forecast."
"On the policy front, we continue to expect the government to loosen policy further in Q3 to offset the ongoing property market correction, manage credit risk events, and lower financing costs for firms, especially for small and micro-enterprises, so that the government can achieve its 2014 growth target of 7.5%."
Key Quotes
"The HSBC flash PMI rose to 52.0 in July from a final June reading of 50.7, much stronger than expected (Consensus and Nomura: 51.0). This is a 1.3 percentage point (pp) increase, in contrast with the historical average of a 0.3pp decline in July (2005-2013, excluding 2009), but is in line with a strong increase in the July MNI business sentiment index."
"The improvement was across the board, with the new orders sub-index rising to 53.7 from 51.8 in June, the new export orders sub-index rising to 52.7 from 50.7 and the output sub-index rising to 52.8 from 51.8. There are also some signs of price pressures, with the input price sub-index rising to 52.9 from 51.3 in June and the output price sub-index rising to 51.0 from 49.9."
"The strong PMI data show that growth momentum continues to build this quarter on the continued rollout of easing measures and some improvement in exports. Our two proprietary indicators also suggest that the strength in growth continued into July. We maintain our forecast of growth at 7.5% y-o-y in Q3 and 7.6% in Q4, with upside risks to our Q3 forecast."
"On the policy front, we continue to expect the government to loosen policy further in Q3 to offset the ongoing property market correction, manage credit risk events, and lower financing costs for firms, especially for small and micro-enterprises, so that the government can achieve its 2014 growth target of 7.5%."