Wednesday, May 27, 2009

China's May PMI Will Test Markets

Watch China's purchasing managers' index (PMI) which will be reported later this week for pullback and a scare on global recovery. Don't read too much into a move down after a tremendous move off November lows to a rowing economy.

We have flagged the seasonal effects of the PMI on metals buying, including both the Import and Export Fair and the Chinese New Year. A drop below 50 isn't necessarily attributed to sinking demand or a sign of deterioration.

The world is nervous after a big run in risky assets and this latest PMI will test that resolve.

Both the China Federation of Logistics and Purchasing on behalf of the National Bureau of Statistics and the CLSA will release indexes on June 1.

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