The Chinese PMIs were mixed in October. The surprisingly strong rise in the Markit manufacturing index could turn out to be temporary and dependent on the trade negotiations, noted analysts at Nordea Markets.
Key Quotes:
The evidence from the Chinese PMIs in October was somewhat contradictory. On Thursday, the official PMIs on both services and manufacturing continued their declining trend which has been present the whole year 2019 and fits well to the overall picture of relatively weak growth prospects of the Chinese economy compared to a year ago. However, today the Markit manufacturing PMI surprised to the upside. Its subindices on new orders, new export orders and production all rose significantly from September.
We do not read too much into a single PMI number in China as their correlation with the hard data is often weak and the PMIs are also very volatile and can give a mixed picture – just like in October. Overall, the PMIs continue to paint a picture of the Chinese economy where growth momentum is now significantly weaker than a year or two ago but there are no signs that the country would be in a free fall.
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