China’s Q2 GDP data confirmed the economic slowdown. And the decline in HSBC Flash PMI to an 11-month low of 47.7 showed the slowdown is deepening.
China will release it’s official PMI at 9 p.m. ET. Economists polled by Bloomberg are looking for manufacturing to slow to 49.8 in July, from 50.1 the previous month.
If PMI falls below the contractionary level of 50, this will be the first time it has done so since September 2012.
This is followed by HSBC manufacturing PMI at 9:45 p.m. ET. Economists are looking for PMI to slide to 47.7, from 48.2.
Societe Generale analysts point out that the weakness in the Flash PMI was “broadly based, with four out of five major sub-indices deteriorating again.” The employment sub-index in the Flash PMI report came in at 47.3 is at its lowest since early 2009. The employment index in the official PMI report has been below 50 for 13 straight months.
With China’s excess capacity problems, we will also be watching the inventory of finished goods sub-index.
Earlier this month China announced that it was for now withholding industry specific data from the PMI report, on account that there isn’t enough time to analyse the data. Some have said the real reason for this move was the weakness of the data. The suspension of this data is however expected to make it more difficult for economists to analyse economic data that many consider unreliable.
China has been moving to restructure steel, aluminium, cement and other sectors that are burdened by excess capacity. And Chinese premier Li Keqiang has promised a 7.5% growth floor for 2013.
But some continue to worry about a hard landing and investors will be watching this data closely.
Here’s a look at how Official and HSBC PMI have shaped up: