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24 Apr 2013
Forex Flash: China’s economy less about exports and more about domestic services - Rabobank
FXstreet.com (Barcelona) - “The Flash estimate of China’s HSBC-sponsored manufacturing index fell in April to 50.5. The index averaged 50.1 through 4Q 2012 and then improved to average 51.3 in 1Q this year,” Rabobank International Financial Markets Research team noted.
“Interestingly,” the analysts expand, “the better tone to this indicator in 1Q wasn’t reflected in the broader economy (recall that GDP growth slowed in 1Q compared to 4Q 2012). Now 2Q has started on a weaker tone in the manufacturing sector.”
“This reinforces the point that China’s overall economy is becoming less about exports and more about the domestic services sector,” they suggest, adding: “In particular, it reminds that the government is still an important force in the broader economy. The budget deficit shrank quite markedly through 1Q as the government took its foot off the accelerator and this has been the dominant force on the broader economy, more so than the manufacturing sector,” the team concludes.
“Interestingly,” the analysts expand, “the better tone to this indicator in 1Q wasn’t reflected in the broader economy (recall that GDP growth slowed in 1Q compared to 4Q 2012). Now 2Q has started on a weaker tone in the manufacturing sector.”
“This reinforces the point that China’s overall economy is becoming less about exports and more about the domestic services sector,” they suggest, adding: “In particular, it reminds that the government is still an important force in the broader economy. The budget deficit shrank quite markedly through 1Q as the government took its foot off the accelerator and this has been the dominant force on the broader economy, more so than the manufacturing sector,” the team concludes.