China's HSBC flash manufacturing PMI jumped to 51.2

Here's how it could tweak GDP forecast.

According to BBVA Research, the HSBC flash manufacturing PMI for September jumped to 51.2 (consensus: 50.9), for a second straight month in the +50-expansion zone (the official PMI has been above 50 for 11 months).

Here's more:

The outturn adds to signs of a pickup in the manufacturing sector, and makes it quite likely that Q3 GDP will exceed our previous expectation of 7.5% y/y.

The improvement in today’s flash estimate was broad-based, with production (51.1) and new orders (52.6) subcomponents rising, along with new export orders (50.8 vs. 47.2 in August).

The upbeat flash PMI reading may suggest an improvement in growth momentum among smaller firms, which are now catching up with the robust trends seen in recent months among the larger SOEs (which are better captured in the official PMI).

The official manufacturing PMI will be released on October 1, and is expected to rise further from 51.0 in August; the final HSBC reading is due on September 30.

Current economic trends are broadly in line with our projection of a moderate recovery in H2, with some upside potential to our full-year 7.6% GDP projection.