- Markit will continue to release the final China PMI readings
- Caixin/Markit PMI readings have been below official measure
China watchers, beset by limited data compared with other major economies, will have even fewer tea leaves to analyze, starting this month.
The earliest estimate of China’s manufacturing sector, the flash gauge of a purchasing managers index compiled by Markit Economics and sponsored by Caixin Media, is being discontinued. Markit said in a statement Thursday that the Sept. 23 flash release was the last. The final reading of the monthly PMI will continue to be released on the first business day of the following month. Markit will still publish flash PMI readings for other countries.
It’s the second change this year for the China indicator, after HSBC Holdings Plc ended its sponsorship and Caixin, a Chinese business magazine, took over. Laura Davis, a Singapore-based spokeswoman for Markit, declined to comment on why the advance reading for China will no longer be released.
China has two manufacturing PMIs, one from Markit and Caixin, and one published by the statistics agency of the Chinese government. The official version typically shows a stronger reading and is based on responses from 3,000 businesses. The Markit one surveys more than 420 firms, including smaller and medium-sized enterprises.
"The flash Caixin PMI is a good indicator to trade on -- if you are an Aussie dollar trader, you definitely have to look at it because it moves the market every time," said Zhou Hao, a senior economist in Singapore at Commerzbank AG in Singapore. "In comparison, the official PMI is too stable -- it’s like China’s GDP figure and is sometimes predictable."
China’s official PMI is published around 9:00 a.m. Beijing time on the first of every month, even on weekends and public holidays. The final reading of Markit/Caixin’s PMI is typically published later, at 9:45 a.m. on the first working day of the month. The flash reading covered about 85 to 90 percent of the sample.
For September, the flash Markit/Caixin PMI fell to the lowest level in 6 1/2 years, while the final reading edged higher to 47.2 on Thursday. The official PMI in September showed a modest improvement, to 49.8 from 49.7 in August.
The Sept. 23 flash release came in less than economists had forecast, triggering declines in Chinese stocks and the Australian dollar.
"The release of the flash PMI this time around may have been viewed as a significant contributor to market volatility," said Michael McCarthy, the Sydney-based chief market strategist at CMC Markets Asia Pacific Ltd. "It’s a given that more information is better," he said. "So to reduce it does raise some questions."
At a press conference in Beijing on July 28 to mark the partnership between Caixin and Markit on China’s PMI, Markit President Kevin Gould said the firm’s compiling of the data is “completely independent,” in response to a question on whether Markit was under pressure from Chinese authorities with regard to its production.
Phone calls to Caixin’s public-relations office weren’t answered on Thursday, which is the first day of a week-long holiday.
— With assistance by Xin Zhou