Analysts at Standard Chartered note that China’s manufacturing and non-manufacturing PMIs improved significantly in November, to 50.2 and 54.4, respectively, from 49.3 and 52.8 in October.
“The sub-indices suggest an improvement in industrial production (IP), export and import demand on a sequential basis. Wholesale prices of industrial goods, however, have eased further m/m.”
“We do not think a single-month improvement in PMIs (especially following the significant slide in October) will change the policy direction. The People’s Bank of China (PBoC) is expected to maintain a pro-growth stance in coming months.”
“We expect export growth to have picked up to 0.4% y/y in November from -0.9% y/y in October. Imports likely rose 0.6% y/y (versus a 6.4% y/y decline in October) on higher crude oil prices and the resumption of soybean imports from the US. The trade surplus is expected to narrow to USD 41.6bn in November from USD 43bn prior due to better import performance.”
“Base effects and elevated pork prices may have pushed up CPI inflation to 4.2% y/y in November from 3.8% y/y in October, while PPI deflation likely accelerated to 1.7% y/y from 1.6%. The purchasing price sub-index returned to contractionary territory in November (49 versus 50.4 in October).”
“We expect IP growth to have edged up to 5.6% y/y in November as work resumed after the week-long National Day holidays in October. Fixed asset investment (FAI) growth likely inched lower to 5.1% y/y YTD in November, given lingering US-China trade uncertainty. We expect retail sales growth to have rebounded to 7.8% y/y in November on higher inflation and Singles’ Day sales promotions.”