China’s official PMIs jumped back into expansionary territory
China’s official NBS PMIs bounced back in March. The manufacturing PMI rose to 52.0, up from 35.7, while the non-manufacturing increased to 52.3 after 29.6 in February. By their very construction, a strong rebound had to be expected. PMI surveys essentially ask whether firm’s businesses have been better or worse compared to the previous month.
- This morning, China’s official NBS manufacturing and non-man. PMIs jumped back into expansionary territory.
- While this confirms China’s economy has likely started to bottom out from the Covid-19 crisis, the outlook will depend on three factors:
- The ongoing normalization in production and consumer demand: While production will likely reach normal capacity utilization in mid-April (provided new corona cases remain on low levels) private consumption is still lagging.
- The global recession: We strongly revised down our 2020 global GDP forecasts (to -1%) which will result in weak Chinese exports.
- An additional fiscal package: Last Friday’s politburo meeting fueled expectations that a package will be announced shortly. We expect total stimulus of around 3.5% – 4% of GDP.
- In sum, we see China’s growth subdued this year at 2.5%. We stress that this forecast comes with an unusually high degree of uncertainty.
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CHINA’S OFFICIAL PMIS JUMPED BACK INTO EXPANSIONARY TERRITORY
CHINA’S RECOVERY CONTINUED BUT A BIT SOFTER THAN EXPECTED
China's economic recovery continued in Q3 2020, although a bit softer than expected. Real GDP growth rose to 4.9% yoy, slightly below the Reuters consensus expectation of 5.2% yoy, but still a substantial upturn from the 3.2% yoy in Q2. On a quarterly base, growth dynamics softened to 2.7% qoq, after 11.7% qoq and -10% qoq in the two previous quarters.
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