China Caixin Manufacturing PMI Climbs to 51.4 in April

China Caixin Manufacturing PMI

On Tuesday, the Chinese economy was in the spotlight, with the Caixin Manufacturing PMI in focus.

In April, the Caixin Manufacturing PMI rose from 51.1 to 51.4. Economists forecast a decline to 51.0. According to the Caixin Manufacturing PMI Survey,

• New orders increased at their most marked pace in over 12 months.
• Manufacturers reported a jump in demand from overseas. New orders from abroad rose at the fastest pace in almost three-and-a-half years.
• Employment levels fell for the eighth month despite the upward trend in demand and production levels.
• Input prices increased at the most marked pace since October 2023, while competition pressured factory gate prices.
• Optimism across the manufacturing sector fell to a four-month low over concerns about increasing costs and competition.

Earlier in the Tuesday session, NBS Manufacturing and Non-Manufacturing PMIs from China signaled slower growth across the private sector at the start of Q2 2024. The NBS Manufacturing PMI fell from 50.8 to 50.4, with the Non-Manufacturing PMI down from 53.0 to 51.2. Economists expected PMIs of 50.3 and 52.2 for April.

April Survey Takeaways

An improving demand environment and softer outprice pressures could further signal a pickup in economic activity through Q2 2024. China accounts for one-third of Australian exports, with 20% of the Australian workforce in trade-related jobs. Upward trends in demand would be a boon for the Australian economy and the Aussie dollar.

Nevertheless, input price trends, falling employment levels, and waning optimism amongst manufacturers were warning signals.

The Aussie Dollar Reaction to the Caixin Manufacturing PMI

Before the Caixin Manufacturing PMI survey, the AUD/USD rose to a high of $0.65676 before falling to a low of $0.65486.

However, in response to the PMI survey, the AUD/USD climbed to a post-release high of $0.65587 before declining to a low of $0.65481.

On Tuesday (April 30), the AUD/USD was down 0.28% to $0.65479. Weaker-than-expected Australian retail sales figures, NBS private sector PMIs from China, and mixed signals from the China Caixin Manufacturing PMI contributed to the losses.

Up Next

US employment cost – wages and CB Consumer Confidence numbers.

Economists forecast employment cost – wages to increase by 0.9% quarter-on-quarter in Q1 2024. In Q4 2023, employment cost – wages rose by 0.9%.

Moreover, economists expect the US CB Consumer Confidence Index to fall from 104.7 to 104.0 in April.

The US economic indicators could influence investor bets on a September Fed rate cut.

Other US data include house prices and Chicago PMI numbers. However, the consumer confidence and wage data will likely influence the Fed rate path more.