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Macro Monday 45~The China Caixin PMI (Manu, Serv & Composite)Macro Monday 45 The China Caixin PMI (Services and Composite released Today Monday) Last week week we looked at the China Caixin Manufacturing PMI which will revise today with its updated readings that were released last Tuesday. We will also look at the China Caixin Services PMI and the Caixin Composite PMI (a combination of the Services and Manufacturing PMI's) as these will both be released later today. 1.Manufacturing PMI – Already released 2. Services PMI – Released Today 6th May 2024 3. Composite PMI Released Today 6th May 2024 (both 1 + 2 combined) What is the Caixin PMI? ▫️ The is an S&P Global report released monthly. ▫️ The Caixin PMI focuses on small & medium sized enterprises (SME’s) in China. ▫️ Surveys a small sample size of 650 private and state owned manufacturers and service providers. Why Focus on China PMI's? China, the 2nd largest economy in the world at approx. $18 trillion is often referred to as the world’s manufacturing superpower. In 2019, the Chinese manufacturing sector contributed nearly $4 trillion towards the country’s total economic output. Manufacturing accounted for almost 30% of China’s GDP during 2019 demonstrating the importance of manufacturing and the surveys completed by the manufacturers through the Purchaser Managers Index (PMI) surveys. Incredibly, in 2023 China’s manufacturing continued to increase and contributed 31.7% to China GDP, furthermore China’s exports reached record highs of $3.36 trillion. For a country that gets a lot of bad economic press, the economic data from manufacturing and exports suggests China is adaptable and is currently in expansionary territory. This will be further evident from the PMI charts we are about to review also. Like most PMI’s the data will generally be derived from the following sub indicies; New Orders, Output, Employment, Supplier Deliveries and Inventories. Reading both PMI’s: >50 indicates expansion in the manufacturing sector compared to the previous month. < 50 represents contraction A reading of 50 indicates no change. The Charts China Caixin Manufacturing PMI - APR 2024 ✅51.4 = Expansionary (>50 is expansionary) ▫️ Increased from 50.9 in Feb 2024 to 51.1 in Mar 2024 ▫️ Increased from 51.1 in Mar 2024 to 51.4 in Apr 2024 – Figures for April were released on the 30th April 2024 (last week). ✅The Caixin Manufacturing PMI has remained expansionary for 6 consecutive (Nov 2023 – Apr 2024). It has been on a long term recovery since the Feb 2020 lows of 40.3, since then making a series of higher lows and recently sustaining 6 months of expansionary readings. China Caixin Services PMI - Mar 2024 ✅52.7 = Expansionary (>50 is expansionary) ⏳ April Figures released today (pending) ▫️ Increased from 50.2 in Sept 2023 to 52.7 in Mar 2024 ▫️ Increase/decrease from 52.7 in Mar 2024 to ??? in Apr 2024 – Figures for April are released on today Monday 6th April 2024. ✅The Caixin Services PMI has remained expansionary for 15 consecutive months (Jan 2023 – Mar 2024). It has been on a long term recovery since the Feb 2020 lows of 26.5 when services took a huge hit during COVID-19 lockdowns, since then making a series of higher lows and recently sustaining 15 months of expansionary readings. China Caixin COMPOSITE PMI - Mar 2024 ✅52.7 = Expansionary (>50 is expansionary) ⏳ April Figures released today (pending) THIS IS THE SUBJECT CHART AT OUTSET ▫️ Increased from 50 in Oct 2023 to 52.7 in Mar 2024 ▫️ Increase/decrease from 52.7 in Mar 2024 to ??? in Apr 2024 – Figures for April are released on today Monday 6th April 2024. ✅The Caixin Composite PMI has remained expansionary for 5 consecutive months (Nov 2023 – Mar 2024). It has been on a long term recovery since the Feb 2020 similar to Manufacturing and Services PMI charts above. Looking at the composite chart, one can see that we moving sideways since Dec 2023 (Dec 52.6, Jan 52.5, Feb 52.5 & Mar 52.7). We are comfortably in the expansionary green zone on the composite. In Summary (subject to tomorrow’s readings for the Services and Composite PMI but we assume expansionary) China Caixin Manufacturing PM I ↗️ Expansionary The Caixin Manufacturing PMI for April 2024 rose to 51.4, marking the sixth straight month of expansion and the fastest growth since February 2023 China Caixin Services PMI ↗️ Expansionary As of March 2024, the Caixin Services PMI increased slightly to 52.7, indicating growth in the services sector for the 15th consecutive month (April 2024 Figures Release Today) China Caixin COMPOSITE PMI ↗️ Expansionary The Composite PMI reached 52.7 in March 2023, the highest since May 2023, showing the fifth consecutive month of growth in overall private sector activity. (April 2024 Figures Release Today) All the above readings suggest a continued expansion across China’s services and manufacturing sectors, reflecting improvements in demand and business activity across the SME cohort. All these charts are available on my Tradingview Page and you can go to them at any stage over the next 5 - 10 years press play and you'll get the chart updated with the easy visual guide I provided. I hope its helpful Lets get after it again this week 💪🏻 PUKA
ECONOMICS:CNCOMPPMI
by PukaCharts
Macro Monday 44~China NBS PMI & Manufacturing Caixin PMIMacro Monday 44 The China NBS PMI and Manufacturing Caixin PMI (both released Tuesday 30th April 2024) China NBS General PMI – Surveys by 3,200 large corporations ▫️ Provided by the National Bureau of Labor Statistics ▫️ Based on a large sample size surveying 3,200 companies across China. ▫️ The NBS PMI has a stronger focus on larger state-owned firms. ▫️ Recently increased from 50.9 in Feb 2024 to 52.7 in Mar 2024 (>50 = Expansionary) China Manufacturing Caixin PMI – Surveys by 650 SME’s ▫️ The is an S&P Global report released monthly. ▫️ The Caixin PMI focuses on small & medium sized enterprises (SME’s) in China. ▫️ Surveys a smaller sample size of 650 private and state owned manufacturers. ▫️ Recently increased from 50.9 in Feb 2024 to 51.1 in Mar 2024 (>50 = Expansionary) N.B: The China Services Caixin PMI will be released Monday 6th May which when combined with the China Manufacturing Caixin PMI will form the all encompassing China Caixin Composite PMI. We will cover the China Services and Composite PMI next week on Monday 6th May 2024. Both the Manufacturing Caixin PMI and the China NBS General PMI are of companies that are mostly export-orientated & located along China’s Costal Regions. These are the manufacturing and export hubs of China, the likes of major coastal regions such as Guangdong, Zhejiang, and Shanghai which have strategic access to ports and shipping routes. China, the 2nd largest economy in the world at approx. $18 trillion is often referred to as the world’s manufacturing superpower. In 2019, the Chinese manufacturing sector contributed nearly $4 trillion towards the country’s total economic output. Manufacturing accounted for almost 30% of China’s GDP during 2019 demonstrating the importance of manufacturing and the surveys completed by the manufacturers through the Purchaser Managers Index (PMI) surveys. Incredibly, in 2023 China’s manufacturing continued to increase and contributed 31.7% to China GDP, furthermore China’s exports reached record highs of $3.36 trillion in 2023. For a country that gets a lot of bad economic press, the economic data from manufacturing and exports suggests China is adaptable and is currently in expansionary territory. This will be further evident from both the PMI charts we are about to review below. Like most PMI’s the data will generally be derived from the following sub indices; New Orders, Output, Employment, Supplier Deliveries and Inventories. Reading both PMI’s: >50 indicates expansion in the manufacturing sector compared to the previous month. < 50 represents contraction A reading of 50 indicates no change. The Charts China NBS General PMI – Surveys from 3,200 large corporations (subject chart above) ▫️ After hitting an all time low of 28.9 in Feb 2020 from the COVID-19 pandemic, China’s NBS General PMI has experienced significant fluctuations. ▫️ The NBS PMI made two subsequent significant lows in Apr and Dec 2022 at approx. 42.6. ▫️ By March 2023, the PMI reached an all-time high of 57.0, indicating strong expansion in both manufacturing and non-manufacturing sectors. ▫️ This fell to a low of 50.3 in Dec 2023, and since then we have risen to 52.7 in Mar 2023. 🚨 Next release for April is released this Tuesday 30thApril 2024. China Manufacturing Caixin PMI – Surverys from 650 SME’s ▫️ The China Manufacturing Caixin PMI for smaller SME’s has demonstrated a series of higher lows since February 2020 demonstrating a strong recovery out of the COVID-19 pandemic. ▫️ Momentarily reaching all time highs of 54.9 Nov 2020, thereafter falling significantly to 46 in April 2022, since then the Manufacturing Caixin has pressed into expansionary territory of 51.1 (March 2024). ▫️ This was the fifth straight month of growth in factory activity and the fastest pace since February 2023, boosted by higher new orders from domestic and abroad, with foreign sales rising the most in a year while output climbed the most since last May. 🚨 Next release for April is released this Tuesday 30thApril 2024. Both PMI's are in expansionary territory which is positive news for China production and exports. SME's appear to have made a more gradual and measured recovery in the Caixin PMI versus the volatile nature of the large corporations in the NBS PMI. Regardless both are swinging higher towards 52 or 53 placing them in the expansionary mode. Potential Trade Set Up On a separate note, adding to China's expansionary potential from above economic data and the PMI charts, one of the worlds greatest traders Peter Brandt @PeterLBrandt recently posted a potential buy signal one of Chinas main indexes, the Heng Seng Index which looks to have formed a Head and Shoulders bottom with a recent break out (see most recent post under this one). The Heng Seng Index (HSI) serves as a great proxy for Asian markets, its the main indicator of the overall market performance in Hong Kong and includes 82 constituent companies, representing about 60% of the total capitalization of the Hong Kong Stock Exchange. The companies in the HSI are considered blue chips and thus the index operates a good basal gauge of market sentiment in China. Definitely a chart to add to your arsenal for Asian markets. All these charts are available on my Tradingview Page and you can go to them at any stage over the next 5 - 10 years press play and you'll get the chart updated with the easy visual guide I provided. I hope its helpful Lets get after this week 💪🏻 PUKA
ECONOMICS:CNNBSGPMI
by PukaCharts
AUD/USD jumps on inflation, China PMIsThe Australian dollar is showing strong gains for the first time in a week. AUD/USD is trading at 0.6764 in Europe, up 0.53%. Australia's inflation fell to 7.4% in January, down from 8.4% in December and below the estimate of 8.0%. Australian Treasurer Jim Chalmers said that he was "cautiously hopeful" that inflation has peaked, but inflation still remained the economy's biggest challenge. The GDP report was not as positive, with a gain of 0.5% q/q in Q4, below the Q3 gain of 0.7% and the forecast of 0.8%. On an annualized basis, GDP slowed to 2.7% in Q4, down sharply from 5.9% in the third quarter. The RBA's rate-hike cycle has slowed economic activity and is responsible for the drop in inflation as well as the soft GDP. The central bank will have to consider how aggressive it should be with regard to future rate increases. Inflation needs to come down much further, but further rate hikes raise the risk of the economy tipping into a recession. The RBA is expected to raise rates by 25 basis points next week but may pause at the April meeting if the data, particularly inflation, allows the Bank to take to a breather. The Aussie received a boost today from strong Chinese PMIs. Manufacturing and Non-manufacturing PMIs improved in February and beat expectations, with readings of 52.6 and 56.3, respectively. A reading above 50.0 indicates expansion. China is Australia's largest trading partner and a stronger Chinese economy means greater demand for Australian exports, which is bullish for the Australian dollar. China's transition from zero-Covid to reopening the economy has gone well so far and a rebound in China is important not just for China and the region but for the global economy as well. AUD/USD has support at 0.6656 and 0.6586 There is resistance at 0.6788 and 0.6858
by OANDA