China: Activity slows in October - ING

Iris Pang, Economist at ING , notes that China’s official manufacturing PMI fell to 51.6 (INGF: 52.9; consensus: 52.1; prior: 52.4) as new export orders, imports and new orders remained above 50, but suggest slower growth than previous months.

Key Quotes

“The most eye-catching sub-index was new export orders. These dropped to 50.1, a level not seen since Nov 2016. This suggests export growth will slow in the coming months.”

“The non-manufacturing PMI benefited from rising demand for telecommunication and satellite related services, but these activities could not balance-off slower activity in the real estate sector. That explains the slower growth in service sector PMI at 54.3 (INGF: 57; prior: 55.4).”

“Though these PMIs were slower than expected, they are still above the reference point of 50. This implies that GDP forecasts for 4Q are very likely to grow slightly slower than the previous 3Q to 6.7% YoY.”

“Generally, China still follows a very strong growth path. It therefore has room for a tight liquidity environment for deleveraging reforms. A stronger yuan is also on the cards because of solid economic growth. We are forecasting USDCNY of 6.50 at end of 2017.”