For the 6th month in a row, China HSBC Manufacturing PMI missed expectations. With a 48.1 print for April (vs 48.3 flash) this is a very modest rise from March's 48.0 but is the 4th month in a row of contraction for the broader-based HSBC-version of the PMI (as opposed to the official more-SOE-biased version which remains in modest expansion). This is the longest streak of contraction since Oct 2012 (and the 3rd consecutive month of new order contraction) as employment drops for the 6th month in a row. Most worrying new export orders dropped further showing no signs of a US-driven pick-up post-weather. As if that was not enough to upset the 'recovery is around the corner' crew, home sales in China in the most recent (most frenetic typically) period, collapsed 47% year-over-year (and a stunning 65% in tier-2 cities). But apart from that - everything's great in the newly appointed largest economy on earth...
The gap between the official and HSBC/Markit PMI is at almost its widest in 2 years...
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with the 6th miss in a row and 4th month of contraction...
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- 1st-tier cities sales falls 40% y/y
- 2nd-tier cities sales drops 65% y/y
- 3rd-tier and 4th-tier cities sales declines 32% y/y
- • Mkt sentiment “not optimistic;” developers prioritizing on sales volume due to cash flow pressure, the report cites
Perhaps HSBC/Markit sums it up best:
"These indicate that the manufacturing sector, and the broader economy as a whole, continues to lose momentum."