Chine: June PMI better, but leading indicators still weak - Danske Bank

According to analysts from Danske Bank the combination of PMI data from China shows that the trend is still to the downside, but they point out that the June rebound gives some relief.

Key Quotes: 

“Chinese leading indicators have pointed to a peak in the cycle since early 2017”. 

“The PMI data for June points to less downside risks though, as it showed a small increase. Still, most of our preferred leading indicators point to a weaker cycle in H2.”

“Housing, which is one of the most important drivers of the Chinese cycle, slowed further in May. We look for more slowing and in combination with weaker infrastructure, we expect it to drive slower Chinese activity in H2 and early 2018.”

“PMI exports for June increased and are still at robust levels. With growth set to stay robust in the US and euro area, we expect China exports to grow at a decent clip.”

“With the industrial cycle turning lower, China is moving from a reflationary force in 2016 to a deflationary force in 2017, as witnessed by downward pressure on commodity prices.”