China: Manufacturing PMIs Confirm Moderate Recovery

China: Manufacturing PMIs Confirm Moderate Recovery

China's NBS manufacturing PMI in October improved slightly and jumped above 50 for the first time since July. The final reading of the HSBC manufacturing PMI was revised significantly higher to 49.5 from 49.1 in the preliminary flash reading driven by stronger new orders. New orders rose above 51 and in the HSBC survey is now at its highest level since October last year. The significant upward revision in the HSBC survey indicates that late responders were more positive suggesting that sentiment improved in late October.

It is now relatively safe to say that both manufacturing PMIs will be above 50 in November. The manufacturing PMIs suggest that there could be some upside to our 8.0% q/q AR GDP forecast for Q4. It is now also relatively safe to say that growth bottomed out in Q3. Policy-wise the implication is no substantial monetary and fiscal easing from here