Photo: Fist Of Legend via YouTube
So, are we supposed to just follow the official number because it’s “official”?
Some sceptics would actually argue that “official” makes the NBS report less reliable since it comes from the Chinese government.
But conspiracy theories set aside, the two reports actually source explicitly different samples.
Bank of America economist Ting Lu, in a note to clients last year, said one of the major differences was that the HSBC number has more exposure to small and medium sized enterprises (SME), which means they have a relatively tough time securing credit when the economy is slowing. They are also considered less favoured by the government.
So, one could actually argue that the HSBC PMI number offers a better cyclical signal. Lu argues as much in his latest note.
We spoke with Luke Thompson, Head of Markit Economics, who told us more about the HSBC/Markit number:
I would just like to clarify two significant points in relation to the China Manufacturing PMI that Markit produces for HSBC.
1) The structure of our PMI survey panel is defined by industry sector and company size as determined by the latest available value added data from the Chinese National Bureau of Statistics (NBS). As such, there is no bias in our sample to small and medium sized industries over large sized companies. Our panel covers small, medium and large sized companies in the proportions determined by the NBS data on value added. This is in common with all PMI surveys that Markit conducts around the globe (using latest official value added data from the relevant official statistics provider). See the attached note for more information on some of the differences between the Markit/HSBC and NBS PMI surveys.
2) Markit is one of the largest independent producers of macro economic data in the world. One of the key features of our data (and one that users most value) is its independence and there is absolutely no involvement in any of our data calculation from any parties external to Markit. I can state categorically that neither the Chinese government or HSBC have any involvement or influence at all in the PMIs that we publish for China or for any other nations.
Thompson forwarded us a 2-page note explaining the difference between the official and unofficial Chinese PMI numbers.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.