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Official PMI reverses negative outlook painted by HSBC PMI
Jun Ma, Deutsche Bank Hong Kong China's official manufacturing PMI [Purchasing Managers' Index] rose sharply to 53.1 in March, up from 51 in February and representing the fourth consecutive monthly increase since its trough in November. It is also much higher than market expectations of 50-50.5. This uptrend is in stark contrast to the recent HSBC PMI, which fell to 48.3 in March from 49.6 in February. We believe the increase in March official PMI is largely due to seasonality, but even after stripping it out, the underlying PMI remains largely unchanged. This outcome — unchanged underlying PMI trend — suggests that the economic condition is better than what was implied by the decline in HSBC PMI (note that we pointed out the internal inconsistency among HSBC March PMI's sub-indices and warned against reading too much into it). The official PMI should be viewed positively by the market. Read More