- Flash China Manufacturing PMI at 50.4 (52.3 in January), a 4-month low
- Data at odds with other surveys
- Historically Lunar New year leads to 0.95 point drop
- Chinese leaders expected to wait for more data


The HSBC 'flash' China manufacturing purchasing managers' index for the month of February has fallen back towards a reading 50.4 from the 52.3 level seen in January, a four month low, according to survey compiler Markit.

The consensus estimate had been for a reading of 52.2.

Similarly, the output index retreated to 50.9 from 53.1, also a four month low. The new orders gauge fell to those exact same levels.

Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC said: "The Chinese economy is still on track for a gradual recovery. Despite the moderation of February's flash PMI, the index recorded the fourth consecutive reading above the 50 critical line. The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth."

For their part, economists at Nomura, highlight how Monday's readings are inconsistent with those from other surveys, such as those from Market News International which registered a big jump in the same time frame.

As well, account must be taken of the increased difficulty of interpreting the surveys given the Lunar New year effect, they explained, although by itself it cannot explain the entire drop seen from January to February.

"We believe China's leaders will wait for the batch of January/February macro data combined (to be released on 9 March) before making an assessment of economic conditions and deciding and appropriate policy stance," Nomura added.

AB

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