Another look at the HSBC flash China manufacturing PMI

Another look at the HSBC flash China manufacturing PMI, this time from Capital Economics:

• Today's PMI reading hints at a slight improvement in momentum in the manufacturing sector
• Today'€™s reading should be treated with a degree of caution
• Markit seem to do a fairly good job of taking into account shifts in the timing of Chinese New Year but these nonetheless make seasonal adjustments less accurate at this time of year

Looking at the breakdown:

• Marked increases in the output, delivery times and stock of purchases components. This may reflect stronger demand
• The new orders component did improve slightly but it may also partly reflect the impact of Chinese New Year, which may not have been fully accounted for by the seasonal adjustmen (the holiday often results in a rush to stock up on inputs and complete existing orders before workers return home, while also resulting in longer delivery times)
• Either way, domestic demand appears to have held up better than foreign demand
• The new export orders component fell sharply to a twenty-month low.