The China official (National Bureau of Statistics) PMI results for April showed a clearly weaker result than March, but with most of the key metrics still in the expansion zone.  The deterioration in the numbers was fairly consistent and broad-based across both the manufacturing and the non-manufacturing PMIs. Although I would note that while the non-manufacturing PMI dropped -1.1pts to 54.0 the Services Index fell 2.6 to 52.6 … andthe Construction Index rose 1.1 points to 61.6which shows that theall-important property sectorcontinues to look very strong.  I’ve previously said the key for China’s risk and macro outlook is the property sector, and if weakness starts to show up in property then you should run, not walk, to the exits.  My view is property will slow down later this year, but for now it still looks strong.
The China macro pulse matters immensely for a few key asset classes such as commodities and emerging markets, but is also vital to the global economy.  For instance in the latest edition of theWeekly Macro Themes reportwe talked about the surprisingly sharp turnaround in global trade growth which was driven by emerging markets; “emerging Asia” was a key driver of that rebound.  Indeed, we have seen solid trade numbers out of China, the implication of that is the rebound in economic activity in China is real, even if fueled by stimulus and property.  But it is looking more like the case that it is a transition from very weak growth to stronger, but not booming, growth.  From bad to OK.
The breadth of the manufacturing PMI expansion remains solid, although it did pull back from what was the strongest reading in 5 years.

Predictably, copper has consolidated in a pattern very much echoing that of the composite PMI readings (in this chart it is the 3 month moving average of the manufacturing and non-manufacturing indexes).

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