China: PMIs still suggest a solid recovery - UOB

FXStreet reports that Ho Woei Chen, CFA, Economist at UOB Group, reviewed the recent PMI figures and recovery prospects in the Chinese economy.

“The Markit/Caixin China manufacturing PMI rose 0.6 points to 53.6 in October from 53.0 in September, recording its 6 th consecutive month of expansion (above-50 reading). This is also the highest reading since January 2011.”

“The rebound in the manufacturing sector from the pandemic low continued to be led by the large-sized enterprises.”

“The CFLP non-manufacturing PMI rose 0.3 points to its highest level since October 2013 at 56.2 from 55.9 in September. The stronger reading is likely to be boosted by the Golden Week given pent-up demand and the easing of capacity restrictions at tourist sites ahead of the long holiday.”

“Overall, China’s October PMIs suggest a sustained recovery in both the manufacturing and services sectors in 4Q20 which means that more broad-based easing measures will likely not be necessary... We have raised our 4Q20 GDP forecast to potential growth rate of 6.2% y/y from our previous forecast of 5.7% with our full-year 2020 GDP growth at 1.9%.”