Flash PMIs on the up

Both the China and EU flash PMI were better in August.  For Europe, this is a continuation of the slow path back to growth over the last few months.  The China PMI was more of a surprise and is one of a number of indicators that suggests while growth is slowing, its currently not as alarming as many would have feared a couple of months ago.

The weakness in the HSBC PMI last month did roil markets upon its release, but it was still a bit higher than July last year.  The most recent reading of 50.1 is a big leap relative to what we saw at the same point last year.

The doesn't appear to be any definitive data to suggest activity has been badly damaged by the retraction in broader credit availability following the squeeze in SHIBOR a few months ago.  If anything, many indicators have proven to be a bit stronger, with things like housing construction and steel production surprising to the upside.

The European PMI data were a little uneven; the German manufacturing was strong, but the French PMI was unchanged at just under 50.

While growth is very welcome, when put in the context of the performance over the last few years the likely pick up is pretty poor.  Nevertheless the switch from drag to boost to activity from the Eurozone is probably more important to global GDP than the current problems plaguing some emerging markets.