HSBC China Manufacturing PMI: A one year low

The HSBC China Manufacturing PMI fell to a one year low of 48.9 in the final reading for April, down from the flash reading of 49.2 earlier. Sequential contraction deepened as new orders contracted and re-stocking appears limited. Meanwhile, the official PMI came in at 50.1 over the weekend, which is the weakest April reading since the series started in 2005. Underlying economic activity appears to have slowed further from March, warranting more aggressive easing measures in the coming weeks in order for the economy to stabilise toward mid-year. We forecast another 25bps policy rate cut within Q2 2015.