OctaFX | OctaFX Forex Broker
Open trading account

Chinese PMI disappointed in August – Danske Bank

FXStreet (Edinburgh) - Senior Analyst at Danske Bank Flemming Nielsen assessed the recent release of the advanced manufacturing PMI in the Chinese economy.

Key Quotes

“The flash estimate for China’s Markit/HSBC manufacturing PMI in August declined to 50.3 from a final reading of 51.7 in July. This is the lowest level since May”.

“The details were also relatively weak with new orders declining to 51.3 from 53.3 and new export orders declining to 51.4 from 52.6. So both domestic demand and exports appear to have lost some momentum in August according to the manufacturing PMI”.

“The decline in the Markit/HSBC manufacturing PMI comes on the back of weak data for July with the exception of exports, which were strong in July according to the foreign trade data. It does appear that the Chinese economy has again lost momentum”.

“There are in our view three possible explanations: 1) continued weakness in the property market, 2) the impact from fiscal stimulus has started to wane with infrastructure spending showing signs of slowing in July and 3) the accelerated corruption campaign in recent months could also have started to weigh on investment demand”.

“At this early stage it does look like the manufacturing PMIs have peaked. So far our view has been that the manufacturing PMIs would peak in September/October around 52”.

“In our view more substantial monetary easing has moved closer, albeit the Chinese government has been reluctant to use monetary stimulus and has preferred fiscal stimulus instead”.

“The possibility of a more substantial easing move should limit downside risk to the Chinese economy”.

GBP/USD found a bottom around 1.6560

GBP/USD kept sliding during the Asian session posting new 4.5-month low at 1.6562; it’s trading at 1.6580 area now.
Read more Previous

No signs of a possible EUR correction

Independent Analyst Vladimir Mihaylov points out that there is still no EUR correction in sight after its almost 200 pips drop seen on Monday.
Read more Next
Start livechat