The consensus expectation, for those of you who don’t know, is created from a poll of professional (usually bank) economists.
To some extent it makes perfect sense — these are the guys who are paid to forecast GDP, inflation and jobs.
In other ways, it’s complete nonsense. Lately, economists are estimating everything and there is just no way I can believe an economist has a reliable (or even coherent) model to predict the Richmond Fed.
On minor releases, the economists simply take the prior release, add or subtract a reasonable number based on the pace of economic growth and voila! expectations are created.
Oftentimes the market expectations doesn’t jive with the consensus. This is especially true when new data is released after the bulk of economist estimates are released.
For the China PMI, there is still no consensus, so market participants are forced to do the work themselves. I suspect the market is looking for something a touch better than the 47.9 Sept reading, say 48.1.
In any case, this is one of the few important indicators left that doesn’t have a consensus but I suspect that won’t last much longer.
