The strongest reading of Chinese private sector manufacturing PMI in 18 months has given the Australian dollar another boost, following yesterday’s rally on the back of stronger than expected Australian inflation data, and helped to strengthen the yuan and equity markets throughout Asia. HSBC China July Manufacturing PMI jumped to 52.0 from 50.7, beating an expected rise to 51.0. Digging into the data it’s encouraging to note that most of the 11 sub-indices improved significantly from June.
The data provides further evidence that the mini-stimulus introduced earlier this year is finding its way into the economy. Both private and public (July's official Manufacturing PMI is due out on August 1) readings of manufacturing sentiment have been gradually improving in recent months and cash is flowing into economy, boosting credit – aggregate financing was at its highest level in June since the mass cash injections of 2009 - and paving the way for the government to reach its 2014 growth target of around 7.5%. Yet, Beijing is expected to maintain its accommodative stance over next few months to better support recovery efforts.
China Manufacturing PMI
Source: FOREX.com, Bloomberg
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