China: Caixin manufacturing PMI unchanged in May – Nomura

Analysts at Nomura note that the China’s Caixin manufacturing PMI was unchanged at 51.1 in May from April, which is weaker than expected (Consensus and Nomura: 51.2).

Key Quotes

“This is inconsistent with the rebound in the official PMI released yesterday, but is not wholly surprising as the Caixin PMI includes many more small enterprises in its sample – and the sub-index for small enterprises in the official PMI fell in May. We maintain our view that suppressed production over the winter and restocking activity could support a rebound in industrial production in Q2 before a cooling in H2.”

“Despite a flat headline number, the output sub-index rose by 0.1 percentage points (pp) to 51.8 in May, lower than the average of 52.2 in Q1 2018 (2017 average: 51.5). The new orders sub-index, however, rose by 0.2pp to 51.8 in May (2017: 52.1), and the new export orders sub-index by 0.4pp to 49.2. The employment sub-index fell by 0.6pp to 48.6. The input and output price sub-indices both increased, by 0.3pp and 1.7pp, respectively, pointing to rising inflationary pressures.”