Did China’s Manufacturing PMI Meet Expectations?
China’s manufacturing PMI
According to a report by the National Bureau of Statistics of China (MCHI) (FXI), China’s final manufacturing PMI (purchasing managers’ index) stood at 51.3 in January 2017 as compared to 51.4 in December. It beat the market expectations of 51.2. However, the manufacturing PMI showed a weaker move in January as compared to December.
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China’s (ASHR) (YINN) Caixin manufacturing PMI, which tracks small and mid-sized companies, stood at 51.0 in January 2017 compared to 51.9 in December. It didn’t beat the market expectations of 51.8, but it was in the expansion zone.
The weaker improvement in manufacturing PMI as compared to December was mainly due to the following factors:
- Production output increased at a slower rate in January 2017 as compared to December.
- Export orders showed weaker improvement in the same month while the new orders remained constant.
- The employment growth also showed weaker improvement in January 2017.
Impact on the economy
After Donald Trump won the US presidential election, uncertainties about trade relations between China (ASHR) and the United States (IVV) (VOO) have increased. Many market participants believe that Trump has a protectionist approach. After taking his official duty on January 20, 2017, Trump immediately signed an order to build a wall between Mexico (EWW) and the US.
He said many times during his campaign that he will bring jobs back to the United States (VFINX) (IWM). Trump’s approach could restrict financial and trade flows with China (MCHI) as well as Mexico. If this happens, there could be a huge shift in global trade.
In the next part of this series, we’ll analyze non-farm payrolls in December 2016.