It has been a positive session for Australian and Chinese PMI data sets and highly welcomed if you remember the turblence caused by the gloomy start to 2016. However it should be remembered that one or two months of data doesn't necessarily change a trend, in the same way that one or two trading candles won't necesseraily break a long-term trendline.
Services PMI continues to expand and remains well elevated but remains within a steady downtrend.
If we were looking at the data through the eyes of a chartist we could lull ourselves into thinking that the PMI reads have formed some form of bottom. Or we could even look at it as a descending triangle. However whilst I'm not one to usually perform technical analysis on economic data, wheat I do glean from the chart above is the failed attempts to remain above 50 on the occasions it has occurred and, like PMI's the world over, we are seeing less momentum on the upside and volatility of the data is suppressed.
Therefor I am not going to read too much into the expansion from the NBS figures this month for the longer-term, but the fact that that Caixin read has also risen in tandem does give the NBS read more credit than usual.
The spread between the two has narrowed significantly recently and the Caixin read has managed to pull itself from the dismal print of 47.2 to nearly testing 50 in 6 months.
The Non-Manufacturing read remains elevated at 53.8 and higher than 52.7 previously. However like the manufacturing reads, it is within a steady downtrend and remains to have a tight correlation with GDP with a 6-month lead. So over the longer-term, if these downtrends persist we would expect this to also weight on GDP further down the track. So whilst today's data set was a positive result for global growth we still have to keep in within context of the larger forces at work, which is growth but at a slower rate.