China’s official purchasing managers index (PMI) is released 2am GMT / 9pm EST tonight.
The manufacturing PMI fell from a 2012 peak of 53.3 in April to 50.1 in July (a number above 50 indicating expansion).
HSBC/Markit’s alternative Flash PMI, released earlier this month showed activity falling to a 9-month low. However, given the wide divergence between the offical PMI and the HSBC/Markit PMI (at least on a month by month basis) care should be taken in reading too much into the slump.
The official PMI is likely to give an indication of whether China’s government are about to release a new stimulus package. If the result is particularly bad commodity prices are likely to pickup next week on anticipation of a recovery in demand for commodities.
A Bloomberg poll of economists expect the manufacturing PMI to ease slightly to 50 – in effect zero growth.
However what is interesting is the remarkable seasonality in Chinese manufacturing activity. In 6 of the past 7 years (as far as the data goes back) activity has increased between July and August. The exception was 2008 when it was unchanged.
Given this pattern (and admittedly ignoring every other bit of anecdotal evidence I’ve read) I’m going to say that the official Chinese PMI will show an increase in August.