20231101-招银国际-China_Economy__PMI_dropped_to_contraction_calling_for_additional_policy_easing_5页_510kb

China Economic PMI Analysis: October 2023

Summary of Key Findings

The report analyzes China's economic data for October 2023, highlighting a significant slowdown. The manufacturing PMI fell below expectations to 49.5%, marking a contraction after one month of expansion. All sub-indexes, including new orders, production, and inventory, deteriorated. Export and import indexes continued to shrink, reflecting weak domestic and foreign demand. Non-manufacturing sectors also weakened, with services PMI dropping to 50.1%. Employment remained in deep contraction, potentially dampening household consumption.

Major Drivers

Due to a pullback in energy and commodity prices, price indexes softened, easing reflation concerns. Enterprise sizes across large, medium, and small categories saw reduced activity. The economy is facing persistent challenges, including property market stress and global uncertainty, prompting calls for additional policy easing.

Policy Outlook

China may loosen fiscal and monetary policies in the near term to support growth, with a 2024 GDP target maintained at 5%. Predictions for 2023 GDP growth are unchanged at 5.2%. Forecasts suggest inflation may rebound with mild aggregate demand recovery over coming quarters.

Risks and Challenges

Ongoing soft domestic demand, high unemployment, and potential global economic volatility are key risks. Authorities may intervene further with stimulus measures, including monetary adjustments and property sector support.