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Lan Shen, Economist at Standard Chartered, points out that their China SMEI reading  shows that activity at SMEs is picking up pace in May as the headline SMEI reading edged up to 58.3 from 58.0 in April, and the growth momentum index strengthened to 15.0 from 11.6.

Key Quotes

“The ‘current performance’ sub-index advanced 0.5ppt to 60.2, while the ‘expectation’ sub-index stayed flat at 62.0,  suggesting resilient performance in May and a stable outlook  for the coming months. SMEs in the services industry and in southern China outperformed during the month.”

“The new orders reading for SMEs increased in May, suggesting a demand recovery in the busy season. Trade tensions between China and the US seem to have had little impact on export orders. As a result, production activity accelerated further and capacity usage increased. The labour market remained tight.”

“The credit conditions sub-index rose 0.5ppt to 52.8 in May, thanks to an improvement in surplus cash. With tighter regulations squeezing off-balance-sheet lending, credit demand remained stronger than supply, compressing bank credit extension to SMEs and lifting lending rates.”