China: Upside surprise in PMI data – Danske Bank

Danske Bank analysts note that China’s both official PMI and the Caixin PMI surprised on the upside, with the official PMI rising to 50.5 from 49.2 last month, and the Caixin PMI rising from 49.9 to 50.8.

Key Quotes

“It was the biggest increase since 2012 in the official PMI. Both new orders and new export orders rose to a six-month high though new export orders are still below 50.”

“We believe we will continue see a rebound in Q2 data, that tends to correlate with commodity prices, and we have seen higher prices for both metals and oil this year. Hence, the PMIs are encouraging.”

“We also expect further monetary easing to add to the stimulus and thus support activity in Q2. The better PMI data came after positive news stories last week that the Chinese-US trade talks are moving forward.”