China flash PMI disappoints, but reflects New Year distortions

February 20, 2014

HONG KONG - China's flash HSBC manufacturing PMI declined in February to its lowest level since July, at 48.3 (consensus: 49.5; prior: 49.5). The outturn caused market sentiment to weaken (the Shanghai composite declined by 0.18%, along with declines of–-2.15% in Japan and 1.19% in Hong Kong) on persistent worries that growth may be slowing.

But BBVA researchers say they would not put too much weight on the result, given high volatility in the HSBC PMI series and, especially, distortions caused by the shift in the lunar Chinese New Year, which ran this year from end-January to early February.
“It is noteworthy that credit data released earlier this week was robust, and we await release of the official NBS PMI (BBVA: 50.3; Prior: 50.5); due on March 1. We maintain our projection of 7.6% GDP growth in 2014,” BBVA says.  www.bbvaresearch.com (ATI).