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HSBC China Manufacturing PMI
China Manufacturing Expands at Slower Rate in December
"Conditions Continue to Improve"
China Manufacturing The HSBC China Manufacturing PMI, compiled by Markit, dipped, but continued expanding, in December to 54.4 from 55.3 (-0.9) in November. This was the first decrease after 4 consecutive monthly increases (August through November). Key points noted in the report were:
* Slower rises in output, new business and backlogs of work.
* Strongest increase in purchasing for eleven months.
* Input cost inflation eased, but remained substantial.
HSBC: "For Q4 as a whole, overall growth of the sector was the strongest since Q1 2010. Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "Inflation rather than growth still remains as the top policy concern, despite the moderation in December’s manufacturing PMI reading. We expect Beijing to continue to relying on quantitative tightening measures to curb inflation and counter the impact of QE2, while modest interest rate hikes are also needed to anchor inflation expectations in the coming months."
China Manufacturing PMI (Chart) Below is a chart of the China Manufacturing PMI for the latest 10 months, from March 2010 through December 2010. Manufacturing has expanded, remained above 50, every month except July 2010.
* Strongest increase in purchasing for eleven months.
* Input cost inflation eased, but remained substantial.
HSBC: "For Q4 as a whole, overall growth of the sector was the strongest since Q1 2010. Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "Inflation rather than growth still remains as the top policy concern, despite the moderation in December’s manufacturing PMI reading. We expect Beijing to continue to relying on quantitative tightening measures to curb inflation and counter the impact of QE2, while modest interest rate hikes are also needed to anchor inflation expectations in the coming months."
China Manufacturing PMI (Chart) Below is a chart of the China Manufacturing PMI for the latest 10 months, from March 2010 through December 2010. Manufacturing has expanded, remained above 50, every month except July 2010.
About the PMI
The HSBC China Report on Manufacturing is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 manufacturing companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on regional and industry contribution to Chinese Industrial Production. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’.
The Purchasing Managers’ Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease
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