In China the flash estimate for HSBC manufacturing PMI in May improved slightly to 49.1 (Consensus: 49.3, DBM: 48.7) from a final reading of 48.9 in April.
The details were relatively strong with new orders improving to 49.3 from 48.9. On a negative note, export orders declined markedly to 46.8 from 50.3 suggesting that the improvement in new orders was driven solely by an improvement in domestic orders.
Inventories were cut at a faster pace in May with the finished goods inventory component easing to 49.0 from 49.7 meaning that the new order-inventory balance improved in May. Current output also declined markedly to 48.4 from 50.4 suggesting that new orders are now increasing faster than production.
There were also some signs that the deflationary pressure is easing with the output price component improving to 48.3 from 46.3, notes Danske Bank. For the output price component this is the highest level since August 2014.
The relatively strong details in the HSBC manufacturing PMI suggest that the HSBC manufacturing PMI has bottomed out. That said, there is still a considerable gap between the manufacturing PMIs and the hard industrial production data with the hard industrial production data substantially weaker than the manufacturing surveys.
