Chinese Yuan: Weak PMIs strengthen policy support case – Commerzbank
Commerzbank’s Charlie Lay and Dr. Henry Hao highlight broad-based weakness in China’s October PMI data, with manufacturing, non-manufacturing and composite readings all falling into contraction territory.
Commerzbank analysts Charlie Lay and Dr. Henry Hao have identified a broad-based weakness in China's October Purchasing Managers' Index (PMI) data. The manufacturing, non-manufacturing, and composite PMI readings all fell into contraction territory, indicating a fragile economic recovery heading into the final quarter of the year.
The manufacturing PMI dropped to 49.3, below market expectations of 49.9, while the non-manufacturing PMI declined to 49.7, falling short of the 50.0 consensus. The composite PMI also decreased to 49.7 from 50.7. This widespread miss highlights the need for policy support before the year-end to meet China's full-year growth target of 4.5% year-on-year.
The decline in new export orders adds complexity to the outlook, as policymakers cannot solely rely on external demand to compensate for the subdued domestic consumption. While the government's target remains within reach with Q3 GDP at 4.5% yoy, a meaningful Q4 rebound is essential to support the economic growth forecast.
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