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Iris Pang, economist at ING, points out that the Chinese official manufacturing PMI was 50.1 in April, lower than last month’s 50.5 (also the consensus expectation for April).

Key Quotes

“Another measure of PMI, Caixin manufacturing PMI, confirms that Chinese manufacturing growth softened slightly to 50.2 in April from 50.8 previously.”

“We highlight that new orders from the official PMI report. These represent growth in domestic demand for industrial products and parts and were solid at 51.4, although softer than the 51.6 a month ago.”

“New export demand, however, shows foreign demand for Chinese made manufacturing products still shrinking at 49.7, although better than the 48.7 in March.”

“The two diverging orders signal that China is still facing external headwinds but fiscal stimulus and monetary easing have supported the domestic economy.”

“We revise our 2Q19 and 3Q19 forecasts for USD/CNY and USD/CNH to 6.75 and 6.80 and keep 6.75 by the end of 4Q19.”