China nbs manufacturing PMI misses expectations in Feb, unlikely to impact future policy direction
Source: FxWire Pro - Insights & Views / 28 Feb 2018 06:20:42 Eastern Standard Time
The official Chinese PMI manufacturing fell sharply in February underpinning the expectation that the Chinese economy is set to slow this year. China NBS Manufacturing PMI came in at 50.3 in February, below expectations at 51.2 and compared to a reading of 51.3 in the previous month.
Growth in China’s services industry also slowed, suggesting the key sector was starting to display signs of fatigue. China Services PMI printed at 54.4 missing forecast at 55.0, down from 55.3 in the previous month. Economists are expecting the Chinese economy to cool in 2018 as the government cracks down on polluting industries and high debt levels.
Julian Evans-Pritchard, senior China Economist at Capital Economics, said the “the risk is still that the economy fares worse this year than is generally expected.”
Some analysts cautioned the timing of the long holiday may have dented the activity readings. The weakness was driven partially due to the Lunar New Year holidays, but factors beyond the Chinese New Year holiday effect may have played an important role to drag the headline numbers lower. The 1.0ppt drop from January to February this time is much larger than that the 0.5ppt (or less) seen in the past few years.
"Today’s PMI release is unlikely to have any impact on the future policy direction. Reform, instead of near-term stimulus, is likely to be the key theme of the upcoming National People’s Congress (NPC) meeting," said ANZ Research in a report.
The antipodeans took a hit after dismal NBS China PMI data. Caixin and IHS Markit data (focused on small and medium-sized enterprises) which is due for release tomorrow will now be in focus. AUD/USD consolidates previous session's slump, up 0.21 percent on the day. NZD/USD extends weakness, was down 0.27 percent on the day.
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