Commentary from the bank in response to the manufacturing PMI numbers this week
- China official manufacturing PMI (July): 51.4 (expected 51.5)
- China official Services PMI (July): 54.5 (prior 54.9)
- China - Caixin Manufacturing PMI for July: 51.1 (expected 50.4)
From the bank, its curious that they don't mention the bounce in the private-survey PMI, only the official PMI:
- sentiment in China's manufacturing sector has dipped; we think this foreshadows gradually slower growth ahead.
- Tightening credit will play a part in this slowdown
- China's NBS manufacturing PMI eased by 0.3pp to 51.4 in July '5'. It is worth noting that input prices rebounded sharply, reaching a four-month high.
- After growing by 6.9% in the second quarter, we think China will slow to 6.5% in Q3 and 6.3% in the final quarter of this year
- Policy tightening has reduced credit availability and raised the cost of funding, particularly for sectors that rely on the shadow credit sector or are interest rate-sensitive, including real estate and infrastructure.
6.5% & 6.3% not to be sneezed at - a healthy clip indeed for such a huge economy
