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Fast Comment ChinaOfficial PMI did not point to renewed growth slowdown in January

  1. Stable official PMI
  2. Growth will soon gradually slow again
Stable official PMI
The official PMI manufacturing confidence indicator fell only slightly from 51.4 in December to 51.3 in January, almost in line with our and consensus’ expectations. The non-manufacturing PMI increased slightly. The January manufacturing PMI from Markit will not be published until Friday, February 3, and we expect - contrary to the consensus view - a marked decline following last month’s surprising jump, as indicated by the decline in industrial profit growth.
Growth will soon slow gradually again
If the decline materialises, we see it as an indication that the 2016 mini-cycle has peaked and that overall economic growth will soon start to gradually slow again, as we expect. The increasing growth in 2016 has primarily been a consequence of the ongoing boom in the property market. The property bubble has already started to deflate, until now in an orderly manner, due to the authorities’ recent measures to dampen price increases in cities where the housing market looks the most frothy. Another reason why we see growth slowing again into 2017 is that the tax break on cars (primarily energy-efficient ones), which has boosted car sales, has been scaled back.


Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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