Flash PMI Foretells China Switching Fates with US, EU Counterparts

Though final statistics for April will not be available until early next month, the Flash Purchasing Managers' Index (PMI) from Markit Economics and HSBC, which handles China, indicate that the world powers are going in drastically different directions.

Though the Flash China Manufacturing PMI was 48.3 in April, a slight uptick from March’s 48, the important categories of output and new orders, including for exports, showed considerable weakness. Decreases were also noted in employment, backlogs of work, stocks of purchases, quantity of purchases and supplier delivery times. Though positive news came from output/input pricing as well as the stock of finished goods, China’s risk is as apparent as ever.

The Markit Flash PMIs for the US and Europe, however, continue to paint of picture of recovery. The US PMI, which was nearly unchanged from March at 55.4, showed strengthening increases in output, new orders and staffing levels, while input cost inflation is at its slowest in about a year. Additionally, production rose at its fastest pace since early 2011. Meanwhile, the Markit Flash Eurozone PMI, up nearly a full point to 54 in April, showed business activity expansion approaching a three-year peak. Goods producers led the improvement in certain areas such as new orders. It’s the tenth consecutive month of gains within manufacturing.

Markit and its partners base the Flash statistics on at least 85% of the expected responses for a country or zone. Final statistics will be available in early May.

- Brian Shappell, CBA, CICP, NACM staff writer

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