China's official manufacturing PMI improves slightly

China's official manufacturing PMI published by the National Bureau of Statistics (NBS) in March improved slightly to 50.1 (Consensus: 49.7, DBM 49.5) from 49.9 in February. The HSBC/Markit manufacturing PMI in its final reading also released this morning declined to 49.6 (revised up from 49.2) from a final reading of 50.7 in February.

The details were relatively weak with the improvement in March primarily driven by an improvement in current output to 52.1 from 51.4. New orders declined slightly to 50.2 from 50.4, while export orders declined slightly to 48.3 from 48.5.

Inventories of finished goods were cut at a less faster pace in March with the finished goods inventory component increasing to 48.6 from 47.0. Hence, the new order-inventory balance continued to deteriorate in March.

The details in the HSBC/Markit manufacturing PMI were also relatively weak with new orders declining to 49.8 from 51.2 but export orders improving to 49.8 from 48.5.Inventories were cut at a slightly faster pace with the finished goods inventory component declining to 49.5 from 50.4. Hence, the new order inventory balance also deteriorated slightly in this survey.

"China is shifting to a more aggressive easing mode and we expect both the leading interest rates and the reserve requirement to be cut in the coming months. This should gradually become a stabilising force", Said Danske Bank in a report on Wednesday