Stimulus Watch: HSBC China Manufacturing PMI Falls to 48.4

Source: MarkitEconomics
The HSBC China Manufacturing PMI hit 48.4 in May, down from 49.3 in April (under 50 = contraction). Chinese manufacturing growth has been trending down for over two years now, and now it's officially contracting. I think traders are waiting to use fiscal stimulus or lower rates as a positive catalyst, but Chinese markets are being affected by the euro zone crisis and Grexit risk. Here is more info on the PMI:

"After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy – registered 48.4 in May, down slightly from 49.3 in April, signalling a seventh successive month-on-month worsening of Chinese manufacturing sector operating conditions."

Here is what Hongbin Qu, HSBC's Chief Economist - China had to say about the PMI data:

“May’s final reading confirmed that manufacturing growth slowed further on weakening demand from both global and domestic markets. This points to a continuous slowdown of the real economy in 2Q and should promote Beijing to step up easing efforts in the coming months. On top of monetary easing via additional RRR cuts and one 25bp rate cut, Beijing policy makers should allow fiscal measures and private investment to play a bigger role in supporting growth.”

Bloomberg article from today:

"China will be able to “cope” if Greece leaves the euro region and no large-scale stimulus is needed for the economy, a researcher for the nation’s top economic planning body said."

The Shanghai Stock Exchange A Share Index is up 0.56% at 2,498.9.

Source: Bloomberg.com

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