CNH: China manufacturing contracts again
The Chinese manufacturing PMI data has seen a contraction for a fifth straight month in August. The state published NBS manufacturing PMI rose to 49.7 from 49.3 in July.
On the bright side the reading was above a forecast of 49.4 as new orders expanded for the first time in five months. Factory owners indicated that producer prices were improving for the first time in seven months. This has led some economists to believe that an uptick in growth activity is still on the cards in the third quarter, particularly if incoming stimulus starts feeding through to the economy.
(Video Transcript)
China's manufacturing sector overview
China's manufacturing sector contracted for a fifth straight month in August. This is the data that we've seen come through today. The official NBS manufacturing purchasing managers' index (PMI) in China rising to 49.7 from 49.3 in July. The reading was above a forecast of 49.4 but anything below 50 still indicates a contraction. On the brighter side, new orders reverted to expansion for the first time in five months. Factory owners indicated that producer prices were improving for the first time in seven months.
USD/CNY
A quick snapshot of where we are on the Chinese Yuan. This is the USD/CNH. It's been flat-lining recently, it's currently trading at 72.978. Some economists believe that an uptick in growth activity is still on the cards in China in the third quarter, particularly if incoming stimulus starts feeding through to the economy. A lot of questions have been asked as to whether or not the stimulus is correctly directed and whether it's in the right area of the economy across China.
Non-manufacturing PMI
And don't forget, recently seen China indicate that it will no longer indicate what its youth unemployment is, meaning that potentially it continues to rise and that is obviously a big worry internally for the Chinese authorities. Non-manufacturing PMI fell to 51 from July 51.5. So that is still expanding, led by the continuing fall in services activity, but we continue to monitor this dollar against the Chinese Yuan.
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