Like It Never Happened! China’s PMIs Back In Expansion Just One Month Later

China’s PMIs staged a large (some might call it wholly improbable) bounce in March, rebounding dramatically from February’s record-low prints.

The manufacturing gauge, which plummeted last month in the wake of the shut-ins and draconian lock-downs implemented to control the spread of COVID-19, surged to 52 in March from 35.7.

That was well ahead of consensus, which was looking for 44.8. The range was 38 to 59.1, reflecting the virtual impossibility of forecasting an extremely fluid situation made more indeterminate still by Beijing’s penchant for massaging the data.

As you can see, the non-manufacturing gauge enjoyed a similarly sharp recovery, bouncing off February’s ghastly 29.6 print all the way to 52.3. That’s more than 10 handles better than the median estimate from the 15 economists who were brave enough to venture guesstimates.

The composite gauge surged more than 24 points to 53 from 28.9.

These figures will draw a combination of relief and eye-rolls. On one hand, nobody wants to know “the truth”, as it were, in terms of just what is (or, more aptly in this scenario, what isn’t) going on in the Chinese economy just a month removed from a total shutdown. But, on the other hand, it’s somewhat frustrating to parse this kind of data. Clearly, it’s reasonable to expect a rebound, but whether what you see in the above visual is realistic is open for debate.

To their credit, China discouraged the market from reading too much into the March figures. Additionally, this is a sequential number after all, and China is getting back to work. The general chatter across desks is that April matters more.

“Although progress has been made on improving business resumption rates, it has not been that impressive”, Nomura wrote, in the latest update to their global COVID-19 anchor report series.

“With the spread of COVID-19 to the rest of the world, China’s economy now faces a worsening demand shock in addition to the COVID-led supply shock, dimming prospects for a V-shaped recovery in the near term”, the bank’s Ting Lu said, adding that on the bank’s estimates, “the cumulative return rate of our 15 sample cities rose to 86.5% on the 60th day of the LNY (24 March) from 84.7% one day earlier, while the full resumption was largely achieved on the 24th day of LNY last year”.


On the bright side, the epidemic has largely run its course in China. Or at least if you’re persuaded by the official data and not too concerned by the threat of a “second wave”.

Additionally, the PBoC is back in the game after Monday’s 20bps cut to the 7-day repo rate.

Nomura goes on to say that as of March 24, they estimate “the narrow measure of the business resumption rate at 78.6%”. (See the right pane above.)

I’ll leave you with their updated scenario analysis for the Chinese economy.



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4 thoughts on “Like It Never Happened! China’s PMIs Back In Expansion Just One Month Later

  1. The China V recovery is one part saving face and two parts of PR designed to give Trump a trade war spasm and or heart attack. Apparently the world is to look for leadership and direction from the Commies, while the chips are down for Uncle Sam. Obviously Trump will get suckered into not playing catch up, but take the virus war economy into high gear and show those Chinese who’s King!

    1. Some what anecdotal, but I own a piece of a company that exports out of China. It was nearly impossible to get anything out of market in Feb. Ships were simply not sailing because they didn’t have enough cargo. The ships all waited until
      March when there was a flood of supply/cargo. All the ships were full per our freight forwarder, they did not see cancelled sails in March. Per our freight forwarder, they are starting to see cancelled sails coming in early April. And that is with air cargo disruptions theoretically pushing more cargo to the boats. With commercial airlines not traveling, the contracted cargo they carry has been cancelled.

      I would expect that March is over inflated as it shows a push forward of activity from Feb and that April reflects the demand destruction we are currently seeing meaning the data will spike down again.

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