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China PMI Back To Safe Zone

download (2)The Chinese manufacturing PMI clocked 50.4; high last seen in September 2014. Caixin Manufacturing Index also figured above 50 mark consistently for 2 months in a row. This merely erases doubts over Chinese economy, if any.

Production and total new orders both rose at slower rates, while export sales continued to decline. Price pressures eased, with both input costs and prices charged increasing at weaker rates than seen in July.

US Interest rate bets set to rise

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Yellen reinforced her intention for a second rate hike this year at the Jackson Hole meeting. U.S. economy now nearing the Federal Reserve’s goals of maximum employment and price stability. She said the economic activity remained steady with household spending on the rise but business investment remains slow and higher dollar restrains the country’s exports. She also emphasized the job’s growth averaged have remained above 190,000 for the past three months. Based on the strong GDP, labor market and inflation expected to rise 2% levels, FOMC continues to anticipate that gradual rate increases in the coming months. Yellen also remains uncertain over economic outlook among other countries which eventually means China manufacturing has comfortably leveraged this information.

Way ahead for Chinese economy

The negatives for the world’s second largest economy seems to have subsided at least for the rest half of 2016. The fixed investment, retail sales, industrial production, housing prices etc have all boosted the view that China’s economy has keeping shadows away. Any major stimulus from China is not expected apart from fixed asset investment or infrastructure investment cheques. The Chinese economy has enough armory to face short term headwinds and provide the much needed boost to global commodity and trade demands.

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CommTathya Team

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