This data should bode well for Monday, China's PMI surprised significantly to the upside and varies quite significantly from the flash numbers seen about a week ago. Keep in mind there are 2 sets of PMI's in China; the official number covers larger and state supported businesses while the HSBC private version covers smaller and mid sized companies. Generally I would put more stock in what a private firm is saying than any official government data, but the markets believe what they believe. This should be a relief of sorts for for those who have been grappling with the potential for significant slowdown in China for the past few months.
- China's big factories were surprisingly busy in March as strong demand quickened the flow of orders, suggesting the economy is stronger than some estimates and possibly reducing the need for an urgent easing in monetary policy. The National Bureau of Statistics said on Sunday China's official Purchasing Managers' Index (PMI) jumped to an 11-month high of 53.1 in March from 51 in February, comfortably beating analyst forecasts of 50.5.
- Supporting prospects of a turnaround, the new orders sub-index jumped to 55.1 in March from February's 51, while the sub-index for new export orders was up at 51.9, compared with February's 51.1.
- China's vast factory sector, which accounted for 40 percent of its economy in 2010, had steadily lost steam in the past year as tight domestic monetary conditions aggravated waning global demand. Output hit 2-1/2-year lows in January and February.
- A flash PMI published by HSBC last week had signaled that Chinese factories were struggling in March as their activity cooled for the fifth straight month and new orders sunk to four-month lows.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog