China Growth Tracker: May Composite PMI to Slip to 53.3

We published a note on how to track Chinese growth in real time using financial and commodity market prices. In these weekly reports, we update the indicators to help us track growth.

Summary

• Our high-frequency China reopening index suggests the composite PMI will slip to 53.3 for May. Our market data-based China growth tracker remained pessimistic.
• In contrast, our economic data-based China growth tracker continues to produce a positive outlook on the economy with Manufacturing New Orders the only negative component.

PMI Downgrades to Continue

Our reopening index has found a local bottom, for now (Chart 1). Weaker outturns at the box office are being offset by a recent increase in domestic travel (Chart 2). Port activity continues to trend lower, too. Latest figures suggest the composite PMI (Wednesday) will slip to 53.3 for May.

However, our market-based measures have continued to worsen, led by a sharp drop in the yearly change of the Baltic Dry Index (Chart 3 and Table 1). Losses were more moderate elsewhere.

Both sit in stark contrast with our economic data-based China growth tracker (Chart 4 and Table 2). The preliminary April reading has seen year growth increase for all components other than Manufacturing New Orders.

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

Ben Ford is Researcher at Macro Hive. Ben studied BSc Financial Mathematics at Cardiff University and MSc Finance at Cass Business School, his dissertations were on the tails of GARCH volatility models, and foreign exchange investment strategies during crises, respectively.

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