The news this week from the two big economies of Asia – China and Japan (and our two major export markets) has been more of the same – OK, not startling, but not enough to help boost confidence.
There was nothing really supportive for Australia in the two surveys.
The official survey of Chinese manufacturing activity, released yesterday, showed no change in September on the slight expansionary reading of 51.1 seen in August.
The new orders sub-index, a proxy for foreign and domestic demand, stood at 52.2, down slightly from 52.5 in August.
The new export orders sub-index, on the other hand, edged up to 50.2 just above the 50-point level which separates expansion from contraction.
That is a small positive unlike the surprise fall the day before in the final HSBC/Markit survey for the month.
The HSBC/Markit ’flash’ report for September last month showed a surprise rise of 0.3 to a figure of 50.5, which led to hopes that the economy was starting to tick higher.
But on Tuesday that the small gain was wiped and the final reading of 50.2 was unchanged from August.
“The data in September suggest that manufacturing activity continues to expand at a slow pace,” according to HSBC’s chief China Economist Qu Hongbin who said in a statement.
“The risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies.”
The report’s subindexes for output and new orders were both revised down in the final reading, but one bright spot was exports and that was confirmed in the final readout, which showed a stronger expansion of total new business, driven by the biggest rise in new export work for four-and-a-half years.
So at least the export order component of both surveys seem to be a touch stronger, which is a small positive.
The events in Hong Kong should be watched. If they get out of hand, they could damage the economy’s standing and lead to a flight of money from the country via Hong Kong.
The normal monthly economic data flow from China will be compounded by the end of quarter figures, especially the GDP growth number.
Steel production is reported to have fallen in September, while electricity consumption is said to have had another weak month after the surprising slide in August.
A figure of 7% is being suggested as a gloomy bottom in the range, to 7.4%. Second quarter GDP grew at an annual rate of 7.5% in the three months to June 30.
Those figures will appear over the next three weeks.
