China: More signs of sequential stabilisation – Nomura

FXStreet (Barcelona) - Asian Economists at Nomura, believe that the climb in Chinese PMI indicates that some signs of improvement might be seen in the economy, but the GDP growth forecast remains well below 7%.

Key Quotes

“The official PMI ticked up to 50.2 in May from 50.1 in April, and the HSBC final PMI was also up slightly to 49.2 from the flash number of 49.1, suggesting sequential stabilisation.”

“Both the production and new orders sub-indices of the official PMI improved during the month.”

“Despite the sequential stabilisation, we expect industrial production growth to remain unchanged at 5.9% y-o-y and fixed asset investment growth to edge down in May, due to the base effect.”

“We maintain our forecasts for GDP growth to slow to 6.6% y-o-y in Q2 from 7.0% in Q1, and for more policy easing with two more benchmark rates cuts and two more RRR cuts for the rest of 2015.”