China’s March PMIs positive: Economy set for expansion?

HONG KONG – With China’s official PMI for March coming in at 50.1, higher than both market consensus of 49.7 and the February reading of 49.9, BBVA Bank says there is a hint that China’s economy has started to move out of contractionary territory to an expansionary trend.

The final version of the HSBC China Manufacturing PMI has also improved at 49.6, up from 49.2 last month (consensus: 49.3). “Although this is an improvement from last month, it is still below the watershed level of 50.0,” BBVA says.

“Overall, it can be said that manufacturing activities have shown positive signs in March, as manufacturing enterprises resume their operations following from Chinese New Year as well as the National People’s Congress (NPC).

“In particular, the NPC has helped to improve market expectations as authorities beef up their efforts to promote monetary easing and stimulate the economy, as shown by the PBoC’s recent two interest rate cuts and one RRR cut.

“We believe that more supportive monetary easing will be implemented in 2015, and maintain our forecast for China  of 2015 GDP growth at 7.0% and Q1 2015 growth at 7.0%.” www.bbvaresearch.com (ATI).