2 Jun 2014
China PMI: Economic rebound unsustainable - Nomura
FXStreet (Bali) - Despite the improved China PMI over the weekend, Nomura Economists continue to believe that the current rebound in economic activity in China is unsustainable, although they recognize upside risks to their GDP forecast.
Key Quotes
"The official PMI rose to 50.8 in May from 50.4 in April, broadly in line with market expectation."
"The rise in the PMI reflects a broad-based improvement of sub-indexes. It is consistent with the flash HSBC PMI and MNI China sentiment indicator, which also both improved in May."
"The improvements in the leading indicators and policy easing measures announced recently pose upside risks to our GDP forecast of 7.1% y-o-y in Q2."
"Policy easing ought to reduce the downside risks to growth in 2014, but also serves to push the risks further back into 2015."
"We believe the current rebound in economic activity is unsustainable and we expect higher inflation in H2, which should constrain the scope of policy easing in 2015. We forecast GDP growth slowing to 6.8% next year."
Key Quotes
"The official PMI rose to 50.8 in May from 50.4 in April, broadly in line with market expectation."
"The rise in the PMI reflects a broad-based improvement of sub-indexes. It is consistent with the flash HSBC PMI and MNI China sentiment indicator, which also both improved in May."
"The improvements in the leading indicators and policy easing measures announced recently pose upside risks to our GDP forecast of 7.1% y-o-y in Q2."
"Policy easing ought to reduce the downside risks to growth in 2014, but also serves to push the risks further back into 2015."
"We believe the current rebound in economic activity is unsustainable and we expect higher inflation in H2, which should constrain the scope of policy easing in 2015. We forecast GDP growth slowing to 6.8% next year."