"The big question is where growth momentum on a sequential perspective is going over the next few quarters. There's still a lot of uncertainty".
- Zhu Haibin, J.P. Morgan
The first Chinese data release in September is out, and the data is highly impressive. The government's official manufacturing purchasing managers index came in at 50.4, well above the 49.9 level forecasted by economists as well as showing the highest reading since October 2014. Meanwhile, the PMI measures changes in activity levels across China's manufacturing sector on a monthly period. The data above 50 mark signals growth, while anything below that level means contraction. By the way the DCLP non-manufacturing PMI came in at 53.5, weaker than the 53.9 previously. The Caixin manufacturing PMI for August, in turn, equals 50, just at expansion, but missing the expected 50.1 level seen and showing a harsh decrease from 50.6 registered in July.
In the meantime, the better-than-expected data may spur growing expectations among investors that China's central bank could delay the process of interest rates or banks' reserve requirements cut in the near time soon. Following decision is leaving the economy more reliant on higher government spending on infrastructure projects, thus boosting demand for materials from cement to steel simultaneously easing strains on ailing heavy industries.
© Dukascopy Bank SA