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Fast Comment ChinaManufacturing PMIs send mixed signals

  1. Markit PMI slightly down, but official PMI slightly up
  2. Economic growth is slowing
Markit PMI slightly down, but official PMI slightly up
The manufacturing PMI from Markit/Caixin fell more than expected from 51.0 in October to 50.8 in November, the lowest in five months. That contrasts with the official manufacturing PMI, which increased to 51.8 from 51.6 against expectations of a decline to 51.4. We tend to rely most on Markit’s PMI, which is less skewed toward big and often state-owned companies.
Economic growth is slowing
In general, economic data out of China are currently not pointing in the same direction, as there is almost stable GDP growth, quite upbeat ‘soft’ indicators (such as the PMIs) and a decline in growth of most monthly activity indicators (such as fixed investments and production). We note that the survey-based ‘soft’ indicators for China tend to lag and not lead actual activity. Furthermore, business sentiment is likely elevated by companies’ profits being buoyed due to higher (commodity) prices following the authorities’ measures against polluting industries and overcapacity industries. We therefore conclude that growth is now slowing again, in line with our forecast of gradually lower growth ahead. In particular, the end of the housing-market and construction boom is behind the slower growth.


Bjarke Roed-Frederiksen

Senior Economist

Latin America and China

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