The Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) rose to 53.1 last month from July’s 52.8, marking the sector’s fourth consecutive month of growth and the biggest rate of expansion since January 2011.
Key points
- CHINA’S AUGUST CAIXIN/MARKIT MANUFACTURING PMI RISES TO 53.1, HIGHEST SINCE JAN 2011 (VS 52.8 IN JULY, REUTERS POLL 52.6)
- 31-Aug-2020 19:45:09 – CHINA’S AUGUST CAIXIN/MARKIT PMI SHOWS EXPORT ORDERS GROW FOR FIRST TIME THIS YEAR, EMERGING FROM COVID GLOOM
Reuters reported that China’s factory activity expanded at the fastest clip in nearly a decade in August, bolstered by the first increase in new export orders this year as manufacturers ramped up production to meet rebounding demand, a private survey showed on Tuesday.
The world’s second-biggest economy has largely managed to bounce back from the coronavirus crisis, and the emerging bright spot in the forward-looking gauge of export orders could herald a more durable and broad-based recovery for the Chinese economy in the months to come.
The upbeat findings contrasted with an official survey on Monday, which showed China’s factory activity grew at a slightly slower pace in August as floods across southwestern China disrupts production, but there were positive signs in both PMIs.
Implications for AUD
The data is contributing to the run of positive recovery data from the nation, spurring investment into risk assets such as global stocks and elevating commodity prices.
However, there cannot be too much price action expected ahead of the Reserve Bank of Australia that meets today, so all eyes will be there from this point on.
Meanwhile, the Australian dollar, a typically cyclical trending currency, has been benefitting from Chinese iron ore import demand and Australia’s current account surplus.
The record trade surpluses led by booming iron ore prices have led to the current account improvement, as has a lower Australian dollar over the past twelve months.
Australia’s current account surplus in seasonally adjusted terms increased $8.7 billion to $17.7 billion in the June quarter 2020, driven mainly by increased goods and services surplus, according to latest figures from the Australian Bureau of Statistics (ABS).
Description of the Caixin China Manufacturing
The Caixin China Manufacturing PMI™, released by Markit Economics, is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private manufacturing sector companies.
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