China's flash manufacturing PMI edges up to 47.8

But this marks the eleventh consecutive month that the PMI is below 50.

According to Nomura, the HSBC flash manufacturing PMI for China rose to 47.8 in September from 47.6 in August, but was still well below the expansion-contraction 50 mark. There was no consensus forecast. September marks the eleventh consecutive month that the HSBC PMI has been below 50.

Here's more from Nomura:

The HSBC PMI is compiled from a poll of some 400 manufacturing companies which tend to be more export orientated than those surveyed in the official PMI, which may help explain why, this year, the HSBC PMI has been weaker than the official PMI.

The flash HSBC PMI is usually not revised significantly in the final PMI, which will be released on 29 September (in August, the final PMI was revised down to 47.6 from the flash estimate of 47.8).

From a simple OLS regression between the HSBC PMI and the official PMI (R-squared is 0.63) the HSBC PMI predicts a rise in the official PMI (due 1 October) to 49.9 in September from 49.2 in August. Nomura's forecast for the official PMI in September is 49.8.

Overall, the HSBC PMI was the first macro data point for September, and suggests that China's economy may be starting to stabilise. The core data for September, to be released in the second week of October, will be more important, and includes fixed-asset investment, exports industrial output, and particularly forward-looking indicators of policy stimulus, such as newly planned investment projects and total social financing.

The HSBC PMI tentatively supports our view that China's economy is starting to stabilise. We believe China's GDP growth will rise slightly from 7.6% y-o-y in Q2 to 7.8% in Q3, and then pick up more strongly to 8.8% in Q4 as the policy stimulus gains traction.