The headline Chinese PMI number showed a solid improvement over last month, and the details are even better.
The official PMI number moved up to 53.4 from a 52.2 in February. HSBC’s number was a bit more disappointing, with their rival index roughly flat month-over-month.
Lots of positive growth in the official PMI, and perhaps most notably, a decline in input prices.
But that’s going to be short lived, according to Societe Generale’s Wei Yao:
Nevertheless, the improvement was marginal and would turn out to be short-lived, in our view. Major disruptions in Asia’s supply-chain, caused by Japan’s earthquake, are likely to send an inflationary shock wave across the globe. Chinese producers are having a very difficult time absorbing all the cost increases, evident in recent news of price hikes of 15-20% being considered by some major consumer goods companies. We think inflationary pressures on consumer prices may be much greater than any administrative price controls can tackle.
Photo: Societe Generale
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