CNY News

Industrial profits in China were up 10.0 percent on year through the first four months of the year, the National Bureau of Statistics said on Wednesday - coming in at 1.762 trillion yuan.

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China's manufacturing sector contracted marginally in May, as output shrank slightly, while new orders stabilized after a three-month sequence of declines. The HSBC manufacturing Purchasing Managers' Index rose to 49.4 in May from 48.1 in April but down slightly from the earlier flash estimate of 49.7, final survey data from Markit Economics showed Tuesday.

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China's non-manufacturing sector expanded at the fastest pace so far this year in May, mirroring robust new orders and improvement in the employment situation. The non-manufacturing Purchasing Managers' Index, or PMI, climbed to 55.5 in May from 54.8 in April, survey results from the National Bureau of Statistics and the China Federation of Logistics and Purchasing showed Wednesday.

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House prices in China rose at a slower rate in May, figures from Reuters based on a National Bureau of Statistics report showed on Wednesday.

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2014-06-23 01:45 GMT (or 03:45 MQ MT5 time) | [CNY - HSBC Manufacturing PMI]

• past data is 49.4
• forecast data is 49.7
• actual data is 50.8 according to the latest press release

if actual > forecast = good for currency (for CNY in our case)

[CNY - HSBC Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy

Acro Expand : The Hongkong and Shanghai Banking Corporation (HSBC), Purchasing Managers' Index (PMI).

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CHINA’S factory sector appears to be doing well, with the HSBC flash manufacturing Purchasing Managers’ Index rising to a seven-month high of 50.8 in June, from May’s 49.4.

It’s the first time the index has topped 50 — the dividing line between expansion and contraction — so far this year (although a competing, official PMI has been stronger). That suggests a combination of government spending and improving exports may be arresting the downward slide the economy has seen so far this year — though a weak housing market remains a major concern.

The reading came in well above forecasts. A survey of analysts by Bloomberg tipped a slight rise in the survey to 49.7. The flash index is published ahead of final PMI data and is usually based on 85 per cent to 90 per cent of total survey responses each month.

HSBC’s chief China economist Hongbin Qu said the improvement in the PMI was broadbased, with both domestic orders and external demand subindices in expansionary territory.

“This month’s improvement is consistent with data suggesting that the authorities’ mini-stimulus are filtering through to the real economy,” he said.

“Over the next few months, infrastructure investments and related sectors will continue to support the recovery. We expect policy makers to continue their current path of accommodative policy stance until the recovery is sustained.”

Here’s what the major economists said:

--The June HSBC flash PMI came as a big upside surprise, jumping to 50.8 from 49.4 in May (versus a market forecast of 49.7). This rebound reflects the initial impact of Beijing’s mini-stimulus programs. As Beijing is determined to deliver stable growth with a slew of mini-stimulus measures, including central bank relending (QE in China) and targeted reserve requirement ratio cuts (a total of RMB200bn), we observed a bounce-back of confidence in the economy which will help bolster demand. -- Ting Lu and Xiaojia Zhi, Bank of America Merrill Lynch

—Today’s PMI reading is the latest sign that, in some sectors at least, downwards pressure on growth has largely eased. The continued recovery of both manufacturing PMIs in recent months, despite further weakness in the property sector, suggests that the government’s targeted approach to shoring up growth is working. The rebound in infrastructure investment since the end of Q1, along with more recent measures to boost lending to small firms, appears to have eased downwards pressure on manufacturing and industrial output. -- Julian Evans-Pritchard, Capital Economics

—Domestic demand is picking up, given the government’s supportive policies. On the monetary policy side, the central bank recently lowered the reserve requirement ratio for selected banks to support small and medium-sized enterprises and rural-related sectors. This will improve small business financial conditions in the coming months as banks will have more money available to pump into the economy ... But given the difficulties from the removal of excess capacity and the downturn in the property market, the pace of recovery will be mild. -- Fan Zhang, CIMB

—Over the last few months the Chinese government has rolled out quite a lot of easing plans, but the pick-up is still quite mild. It’s too early to say the economy has bottomed out. What the government can do now is buy time to allow the impact of reforms to kick in. We are still quite worried about the property sector, but there’s a chance we could see the economy improve based on more fiscal spending. -- Xie Dongming, OCBC

—It seems the selective easing is working, with the help of exports, although I wouldn’t say so soon that everything’s well. The housing downturn could continue to deepen, so the downside risk is still there. The drag from the housing sector will remain, so we’re unlikely to see a very strong rebound like we saw in the third quarter last year. Growth will probably flatline — that’s the best scenario in my view. -- Wei Yao, Société Générale

A leading economic index for China continued to expand in May, albeit at a slower pace, the latest survey from the Conference Board revealed on Tuesday.

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Figures from China's National Bureau of Statistics showed on Friday industrial profits rose in May, although at a slower rate than in the previous month.

The growth in industrial profits slowed to 8.9 percent on year in May after profits surged 9.6 percent in April.

Profits for the five months ended May were up 9.8 percent, edging down from the 10 percent growth for the four months ended April.

Among industries, profits from mining industries declined by 16.4 percent for the January to May period. Meanwhile, manufacturing sector profits rose 13.8 percent and profits from the electricity, heat, gas and water production and supply industry were up 25.1 percent.

Among enterprises, profits of private enterprises increased the most by 12.9 percent, a faster rate of increase than the 11.6 percent rise for the four months ended April. Profits from state-owned enterprises grew 3.4 percent in May after the 3 percent rise in the January to April period. Collective enterprises profits rose at a slower rate of 0.9 percent in May following the 1.2 percent increase in the January to April period.

Data released earlier this week showed that Conference Board's leading index for China indicated continued weaknesses in China's real economy in the coming months. Data from China's National Bureau of Statistics showed last week that the downtrend in house prices growth continued in May.

However, a survey by Markit Economics and HSBC Bank showed last week that China's manufacturing activity rebounded unexpectedly in June to its highest level in seven months.

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The Chinese manufacturing purchasing managers' index, or PMI, rose to a six-month high in June after a weak start to the year, the results of a survey by the China Federation Of Logistics And Purchasing and the National Bureau of Statistics showed Tuesday.

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China's services sector grew at a faster pace in June, the latest survey from HSBC and Markit Economics revealed on Thursday - posting an index score of 53.1 and touching a 15-month high.

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Consumer prices in China were up 2.3 percent on year in June, the National Bureau of Statistics said on Wednesday.

That was shy of forecasts for 2.4 percent, and it was down from 2.5 percent in May.

Individually, food prices jumped an annual 3.7 percent in June, while non-food prices gained 1.7 percent.

The statistics bureau also noted that producer prices were down 1.1 percent on year versus forecasts for -1.0 percent following the 1.4 percent contraction in May.

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