China's manufacturing PMI slows to 50.6 in March

But production and new orders are still over 50.

BBVA cited data released yesterday in its report, saying that China’s official NBS manufacturing PMI declined to 50.6 from 50.9 in March, broadly in line with expectations (BBVA: 50.5; consensus: 50.7). 

While pessimists within the analyst community cited the figure as another sign of slowing growth in China, the outturn was the seventh consecutive reading above the 50-expansion threshold.

Here's more from BBVA:

Among the sub-components new export orders recorded the biggest drop, to 48.6 from 50.9 in March, suggesting that exports will face headwinds in the months ahead (see below on Korea).

On the other hand, production and new orders, while lower than previous month, remained above 50, suggesting that domestic demand remains intact. The data were broadly consistent with today’s HSBC PMI for China, which fell to 50.4 from 51.6 in March.

Despite signs of external weakness, the currency has continued to strengthen, reaching a new high of almost 6.15 per USD today. We expect GDP growth to pick up gradually through the rest of the year on supportive government policies, in line with our full-year GDP growth projection of 8.0%.