Chinese Composite PMIs arrive at 54.5 in expansion territory

China’s official August PMIs are out as follows:

• Official Manufacturing PMI at 51.0 (Reuters poll 51.2) vs 51.1 in July.
• China aug official services PMI at 55.2 vs 54.2 in July.
• China aug official composite PMI at 54.5.

China’s official August PMIs

The manufacturing and non-manufacturing PMIs have both been comfortably above the 50 expansion/ contraction threshold which has been signalling robust growth as the nation emerges from beneath the coronavirus lockdown.

The implications are positive for risk assets, such as equities, and for currencies linked to trade, such as the Aussie.

AUD/USD was trading off the session highs leading into the release at 0.7355, down from 0.7381 highs.

The pair was unchanged on the data that came with no surprises one way or the other.

AUD/USD Analysis

• AUD/USD Price Analysis: Bears setting their sights as price steps into their lair

Descriptions of Manufacturing and non-manufacturing PMIs

The Manufacturing Purchasing Managers Index (PMI) released by the China Federation of Logistics and Purchasing (CFLP) studies business conditions in the Chinese manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction. As the Chinese economy has an influence on the global economy, this economic indicator would have an impact on the Forex market.

The official non-manufacturing PMI, released by China Federation of Logistics and Purchasing (CFLP), is based on a survey of about 1,200 companies covering 27 industries including construction, transport and telecommunications. It's the level of a diffusion index based on surveyed purchasing managers in the services industry and if it's above 50.0 indicates industry expansion, below indicates contraction.