HSBC’s China Manufacturing Flash PMI Numbers At 3-Month Low

HSBC has published early estimates of China’s manufacturing data today, moderately lower than that for November 2013 at a three-month low at 50.5. The overall manufacturing activity in the country has seen reduced output, with a faster rate increase in new orders.

New domestic and export orders both grew at a faster rate. However, the backlog of work has risen at a slower pace. This is clearly because of the decrease in employment in China.

Regarding this data, Hongbin Qu, Chief Economist for China at HSBC said, "The December HSBC Flash China Manufacturing PMI reading slowed marginally from November’s final reading. But it still stands above the average reading for 3Q, implying that the recovering trend of the manufacturing sector starting from July still holds up. As a result, we expect China's GDP growth to stabilise at around 7.8% YoY in 4Q".

The input costs for the Chinese economy has also increased, albeit at a slower rate. More interestingly, the suppliers' delivery times have shown a decreasing trend. Hence, there are some positives against some negatives here. However, with the Chinese government's thrust on economic reforms, we do not see more negative concerns due to this event.