Econintersect: The Flash HSBC Manufacturing PMI (Purchasing Managers' Index) edged up slightly from the 50.2 final reading for August. The September "Flash" (preliminary) reading is 50.5 giving a greater margin above the 50 level which is the demarcation between expanding and contracting manufacturing activity.  The report has been greeted with enthusiasm.  The Bloomberg headline says "relieves growth concerns".  But Econintersect cautions that too much may be read into this reading.  In July the reading was 51.7.  If the PMY dropped from 51.7 to 50.5 would the headines celebrate relieved growth concerns?

CNBC reported that a matter of considerable concern is the employment sentiment which has dropped to a level last seen in the Great Recession in the spring of 2009. Reuters pointed out that imports, which are a reflection of future growth, are still very weak.

Here is the Summary provided by Markit:

The Flash report is for preliminary data from the small and mid-sized companies that HSBC surveys. These are mostly privately owned and are quite sensitive to China's volume of exports. The final report, which rarely deviates significantly from the Flash report is due to be released 30 September. The official PMI survey run by the government is due out at approximately the same time. The government report covers mostly large and government owned enterprises and tends to be less volatile than the HSBC survey results.

Hongbin Qu, Chief Economist China and Co-head of Asian Economic Research at HSBC commented on the latest report, calling for "more monetary easing" to "steady the recovery":

"The HSBC China Manufacturing PMI rose to 50.5 in the flash reading for September, up from the final reading of 50.2 in August. The picture is mixed, with new orders and new export orders registering some improvement.  Meanwhile, the employment index declined further and disinflationary pressure intensified. Economic activity in the manufacturing sector showed signs of stabilization in September. However, overall the data still point to modest expansion. The property downturn remains the biggest downside risk to growth. We continue to expect more monetary easing from the PBoC in order to steady the recovery."