He continues to explain that “September marks the eleventh consecutive month that the HSBC PMI has been below 50. The HSBC PMI is compiled from a poll of some 400 manufacturing companies which tend to be more export orientated than those surveyed in the official PMI, which may help explain why, this year, the HSBC PMI has been weaker than the official PMI.”
He notes that this data set is not usually revised significantly in the final PMI which is due on the 29th September before explaining that “From a simple OLS regression between the HSBC PMI and the official PMI (R-squared is 0.63) the HSBC PMI predicts a rise in the official PMI (due 1 October) to 49.9 in September from 49.2 in August. Nomura's forecast for the official PMI in September is 49.8.”
This data represents that first macro data point for September and suggests that China’s economy may be starting to stabilize. The core data for September will be more important and includes fixed-asset investment, exports industrial output and particularly forward looking indicators of policy stimulus.
He concludes that “The HSBC PMI tentatively supports our view that China's economy is starting to stabilise. We believe China's GDP growth will rise slightly from 7.6% y-o-y in Q2 to 7.8% in Q3, and then pick up more strongly to 8.8% in Q4 as the policy stimulus gains traction.”