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'Last quarter of slowing GDP' for China
Chinese manufacturing data came in slightly lower than expected for March but analysts say that growth will rebound from here
The official purchasing managers' index (PMI) data released by the National Bureau of Statistics hit an 11-month high of 50.9 in March but was below consensus forecasts of 52 in a Reuters poll of analysts and of 51.2 in a Bloomberg poll.
"Based on historical patterns, the March reading was quite weak," Luis Kujis, an analyst with RBS, said.
Kujis notes that the official Chinese PMI data has not been fully adjusted for seasonal patterns and historically March PMI tends to be strong, as companies ramp up production after the Chinese New Year.
"We cannot completely rule out that the changes in methodology introduced early this year, largely to expand the coverage, have also led to a better seasonal adjustment," he said.
Distortions caused by seasonal factors are what Carl Weinberg, chief economist at High Frequency Economics, also blames for the apparent weakness of the monthly figures reflecting Chinese growth, saying that "the monthly figures understate what is actually happening in the economy by a substantial margin."
This year there were fewer working days compared to last year but if it had not been for that, year-on-year GDP would have accelerated to 9.2% in the first quarter, he estimated.
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But the National Bureau of Statistics is likely to publish a GDP growth figure closer to 7.5%, which would be little changed from the pace of growth in the fourth quarter of last year, and this would "scare unsophisticated observers and market participants" although "careful calendar geeks will know better," according to Weinberg.
"This should be the last quarter of slowing GDP," he added.
The PMI data for March indicates that growth in industry continued but somewhat softened, Kujis says. RBS forecasts first-quarter GDP expansion for the Chinese economy at 8.2% year-on-year.
"We assume some dampening impact on growth in domestic demand stemming from measures to rein in housing price increases and shadow banking," he said.
"However, we expect a gradual improvement in global growth throughout 2013, especially in the US, and our forecast reflects some impact of this on China's exports and sentiment more broadly."
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