From NAB's economists today:
**General commentary on the Chinese economy has been remarkably bleak. Many articles have cited recent data as evidence of a clear slowing in the economy, and a few have even alluded to a downturn. Commodity and equity markets have been a little spooked, but is the hoopla justified? Not quite.
**The case for China slowing has been based on a limited array of data. Pundits jumped at a weak April reading of the Conference Board’s Leading Economic Index. Taken literally, it suggested annualised economic growth slipped to 4 per cent in the month. But a literal read of the March outcome pointed to annualised growth of no less than 15 per cent. So, despite the Conference Board’s admirable attempt to synthesize six volatile economic indicators, the results must still be viewed across a reasonable time span to be meaningful.
**Similarly, the recent HSBC Purchasing Managers Index (PMI) reading of 50.4 was interpreted as evidence the manufacturing sector had ‘stalled’. Again, too strict an interpretation, especially when a similar survey, the National Bureau of Statistic PMI, shows growth remaining solid.
**So is the Chinese manufacturing sector still booming? We can’t jump to this conclusion, either. It is slowing. Just not that much.
