China: Surprisingly high PMIs to secure annual GDP growth at 6.2% – ANZ

Early on Monday, the Australia and New Zealand Banking Group (ANZ) released a report expecting China’s 2019 full-year Gross Domestic Product (GDP) growth at 6.2%. However, the assumption is based on the condition that the recent recovery in manufacturing and non-manufacturing Purchasing Managers’ Index (PMI) from China will continue.

Key quotes

"Both manufacturing and non-manufacturing PMIs jumped significantly in November, indicating a high possibility of China reaching 6.2% annual GDP growth in 2019."

"However, the surging headline manufacturing PMI masks deflationary risks in the sector. Holiday demand contributed to higher production (52.6 in Nov vs 50.8 in Oct) and new orders (51.3 in Nov vs 49.6 in Oct). But both input and output price indices continued to trend lower in November to 49.0 and 47.3, from 50.4 and 48.0 in October, respectively."

"The rebound in the non-manufacturing sector appears to be more meaningful. Boosted by holiday demand, manufacturing-related services sectors held up in November, according to the NBS. In addition, policy support for investment kept the construction sector upbeat. As a result, prices and employment sub-indices reported year-high readings."