Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Overnight reading for Purchasing Managers Indexes in China and India were released. As always China has two reports, one from the government which focuses on large and state owned companies, and one by private firm HSBC which has a broader focus – both increased month over month, although the latter still shows a slight contractionary reading. Meanwhile, India’s measure rose to an 8 month high.
Via Bloomberg:
- In China, the purchasing managers’ index rose for a third month to 51.0 from 50.5 in January, the statistics bureau and logistics federation said in a statement today. In India, a PMI released by HSBC Holdings Plc and Markit Economics was close to an eight-month high.
- Today’s data, along with a surprise gain in Japanese companies’ capital spending and South Korea’s biggest increase in exports in six months, add to signs that global growth prospects are improving as the U.S. recovery strengthens and Europe works to contain its debt crisis.
- In China, the PMI’s level, above the expansion-contraction dividing line of 50, was the highest since September and compares with the 50.9 median estimate in a Bloomberg News survey. Economic data in the first two months are distorted by the weeklong Chinese New Year holiday.
- A separate manufacturing index released today by HSBC Holdings Plc and Markit Economics rose to 49.6 in February from 48.8 the prior month, the third straight improvement and the highest since October.
- Meanwhile, the Indian gauge was at 56.6 in February from 57.5 in January, HSBC and Markit said.
- A fourth-quarter slowdown in exports was probably “transitory” and economic-growth forecasts for Asia “are too low,” said Condon, who previously worked at the International Monetary Fund.
- However, HSBC’s survey, which is considered a better gauge of conditions at small and medium-sized companies, showed new orders contracted marginally in February, marking the fourth straight month of weakness. Anecdotal evidence from survey respondents also backed up the view of muted demand, HSBC said, with its survey finding new export business contracting at the fastest rate in eight months.
- “Despite the marginal improvement in the headline PMI — led by quickening production and a recovery of hiring after the Chinese New Year — deteriorating external demand is adding more downside risks to growth in the absence of a strong comeback in domestic demand,” HSBC economist Hongbin Qu said in a note accompanying the PMI data.
Of course the numbers are very noisy in January and February due to seasonal effects from the Chinese Lunar New Year.
- The subindexes of both PMIs tracking input costs suggested inflationary threats. The government-backed survey of input prices rose to 54 in February from 50 in the prior month, while HSBC’s survey showed average input costs ticking up for the first time in four months.
- Analysts said the surge was a result of higher energy costs and rate hikes by utilities
Keep in mind U.S. ISM Manufacturing will be released today at 10 AM – it is still one of the few reports that can be market moving in the haze the central bankers have over markets.
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