China: PMI picked up in November - Nomura

Analysts at Nomura explain that China’s official PMI rebounded by 0.2 percentage points (pp) to 51.8 in November, against market expectations of a continued moderation (Consensus and Nomura: 51.4).

Key Quotes

“By company size, the rebound was driven by small- and medium-sized enterprises. The PMI for medium-sized enterprises rose by 0.7pp, above the expansion/contraction threshold of 50, while the PMI for small-sized enterprises rose by 0.8pp to 49.8, closer to but still below the threshold. The PMI for large enterprises fell slightly.”  

“By component, the gain was led mainly by the sub-indices of output, new orders and supplier delivery time, which rebounded by 0.9pp, 0.7pp and 0.8pp, respectively.”  

“The moderate rebound of the official PMI suggests growth momentum was stable in November. As the PMI captures sequential changes in manufacturing sentiment, we believe the slight improvement in November was mainly due to the weak performance in October, possibly dragged by anti-pollution efforts. We continue to expect GDP growth to slow further to 6.6% y-o-y in Q4 from 6.8% in Q3.”

“November data forecasts

We expect industrial production to edge down in November, in line with moderations in high-frequency data. We expect consumption growth to ease slightly, as rising household debt may weigh on private consumption (to be released 14 December). We expect PPI inflation to resume its moderation in November due to a base effect, while CPI inflation should remain benign and contained (9 December). Lastly, we expect trade growth to drop visibly in November, partially due to a high base in last November (8 December).”