It's a mixed bag in Asia, but all things considered an overall weak one. Let's take a look at the data to see what bulls and bears have to cheer about.
The HSBC China Services PMI Shows Sharpest Contraction of Output Since November 2011.
HSBC China Composite PMI signalled that business activity in China fell for the second month running in March. Though slight, the rate of contraction was still the sharpest since November 2011, with the HSBC Composite Output Index posting at 49.3 in March, down from 49.8 in February.
Data for March signalled that the reduction in overall business activity was driven by the manufacturing sector, which posted its sharpest contraction of output since November 2011. Meanwhile, services activity growth strengthened to a four-month high, as signalled by the HSBC China Services Business Activity Index posting at 51.9 in March, up from 51.0 in February.
However, growth remained subdued in the context of historical data.
New business followed a similar trend to output, with new work falling for the second successive month at manufacturers, but rising at service sector firms. The rate of new order growth in the service sector was little-changed from February and moderate, amid reports of new client wins. However, manufacturers’ new orders fell at the strongest rate in 28 months.
Chinese manufacturers cut their staffing levels again in March, albeit marginally. In contrast, higher volumes of new work led service providers to expand their payroll numbers at the fastest rate since June 2013.
Notably , job creation at service providers offset job shedding at manufacturers, and led to the first increase of employment at the composite level for five months.
Commenting on the China Services and Composite PMI™ data, Hongbin Qu, Chief Economist, China & Co - Head of Asian Economic Research at HSBC said:
"The HSBC China Services PMI suggests a modest improvement of business activities in March, with employment expanding at a faster pace. However, combined with the weaker manufacturing PMI reading, the underlying strength of the economy is softening, which should ultimately weigh on the labour market."
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