China: Manufacturing PMI likely to remain in contraction territory - TDS

Analysts at TD Securities suggest that for the Chinese economy, manufacturing PMI is likely to improve slightly from 49.2 in February, but it will still remain in contraction territory for a fourth straight month at 49.3 in March.

Key Quotes

“As revealed in the February PMI components, new orders bounced back above 50, suggesting some relief. However, the manufacturing sector continues to be impacted by weakening trade despite hopes of US-China trade deal.”

“Similarly stimulus measures may provide a cushion though we don’t expect the PMI to move into expansion any time soon given the pressure on manufacturers’ margins as reflected in sharply deteriorating profits. The Caixin PMI may fare a little better but unlike consensus we expect it to remain in contraction.”