China – Official PMIs suggest further weakening

The momentum in manufacturing fell again in November. What’s more concerning is the fall in the services index to below the 50-neutral mark for the first time since last year.

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Tommy Wu

Commerzbank Economic Research

November 30 2023

The momentum in manufacturing fell again in November. What’s more concerning is the fall in services index to below the 50-neutral mark for the first time since last year. Recent policy support to real estate and stronger fiscal spending will help boost growth in early 2024. But more easing will likely be needed to shore up growth through next year.

November official PMIs raised concerns about the health of China’s economy. The manufacturing PMI dipped further into contractionary territory to 49.4 from 49.5 in October. The PMI stayed below the 50-neutral mark since April this year, except for just one month in September (Chart 1). This suggests that manufacturing in China has not been able to gain traction following the initial spike after the Covid reopening. Details suggest both domestic and external demand has remained weak. Also, large firms have continued to perform better than small and medium firms.

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