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16 Dec 2014
China: HSBC PMI declines more than expected – Danske
FXStreet (Barcelona) - The Danske Bank Research Team note that China’s HSBC PMI declined more than expected to 49.5, and view that the weak PMI makes an interest rate cut by the PBoC in Q1 2015 more likely.
Key Quotes
“The flash estimate for the HSBC/Markit manufacturing PMI in December declined more than expected to 49.5 (consensus 49.8, our estimate 50.0), down from a final reading of 50.0 in November. This is the lowest level for the HSBC/Markit manufacturing PMI since April 2014.”
“The price components suggest continued deflationary pressure, driven largely by lower input prices.”
“The decline in the HSBC/Markit manufacturing PMI in December suggests that the People’s Bank of China’s (PBOC) interest rate cut in November has so far not had any substantial impact on domestic consumption.”
“In our view, in the coming months, China will remain in a moderate monetary easing cycle and we expect the PBoC to cut the reserve requirement for banks by 50bp twice in coming months, with the first cut possible as early as later this month. In our view, the weak PMI also makes another interest rate cut more likely in Q1 15.”
“Looking ahead, we expect China’s manufacturing PMIs to improve in H1 15 on the back of monetary easing and some improvement in global growth. This said, the weak details in the HSBC/Markit manufacturing PMI admittedly suggest that it could move lower in Q1 15.”
Key Quotes
“The flash estimate for the HSBC/Markit manufacturing PMI in December declined more than expected to 49.5 (consensus 49.8, our estimate 50.0), down from a final reading of 50.0 in November. This is the lowest level for the HSBC/Markit manufacturing PMI since April 2014.”
“The price components suggest continued deflationary pressure, driven largely by lower input prices.”
“The decline in the HSBC/Markit manufacturing PMI in December suggests that the People’s Bank of China’s (PBOC) interest rate cut in November has so far not had any substantial impact on domestic consumption.”
“In our view, in the coming months, China will remain in a moderate monetary easing cycle and we expect the PBoC to cut the reserve requirement for banks by 50bp twice in coming months, with the first cut possible as early as later this month. In our view, the weak PMI also makes another interest rate cut more likely in Q1 15.”
“Looking ahead, we expect China’s manufacturing PMIs to improve in H1 15 on the back of monetary easing and some improvement in global growth. This said, the weak details in the HSBC/Markit manufacturing PMI admittedly suggest that it could move lower in Q1 15.”