Watch the May Purchasing Managers Index (PMI) in China for extreme seasonality and sentiment adjustment on the resurgent global demand theme. May 31 is the reading by the government and CLSA, which conducts a less state org-focused survey that many feel is more accurate.
There were contradictory reports of growth in March, but both reported expansion in April with a PMI above 50.
Do not be surprised to see a pullback in PMI for the month. Just as global industrial metals markets are familiar with the impact of the Chinese New Year, investors must also understand China's domestic seasonality.
One element with which to be atuned: China's massive Import and Export Fair in Guangzhou, which is by far the most important trade fair in the world taking place twice a year. The April fair is much more important than the one in October. More export orders are signed at this fair than any other time of year, boosting PMI for April.
Another source of seasonality is, of course, the Chinese New Year which falls in either January or February and boosts PMI for March.
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