Fast Comment ChinaMixed PMIs – a sign of stimuli?

Manufacturing PMI from Markit fell slightly from 50.8 in July to 50.6 in August, which was marginally weaker than expected. Meanwhile, official manufacturing PMI increased marginally from 51.2 to 51.3. Seen together, we interpret these as stable PMI figures with high uncertainty. They do not alter our view that PMIs and overall economic growth are on a falling trend as the past deleveraging efforts and trade tensions are impacting negatively.

The tide for economic policies has changed recently, with clear signals from China’s authorities that both fiscal and monetary policies are being loosened rather than tightened now. The increase in the official PMI could be a first sign of stimuli kicking in, as the official PMI is often considered more exposed to the big state-owned domestic-oriented companies than the more export-oriented private companies in the PMI from Markit. We will probably have to wait a few more months for more convincing signs in the statistics of the authorities’ measures to support growth.