20231201-招银国际-China_Economy__PMI_contraction_signals_caution_ahead_5页_514kb

China Economic PMI Analysis Summary

Key Findings

• Manufacturing PMI: November 2023 manufacturing PMI dropped 0.1 percentage point to 49.4%, below market expectations, continuing the contraction. Production index also decreased slightly to 50.7%.
• Demand Conditions: New orders, export orders, and existing orders all remained in contraction at 49.4%, 46.3%, and 44.4%, respectively, indicating weak domestic and external demand. Material purchase volume and import orders edged down to 49.6% and 47.3%, reflecting reduced corporate procurement due to subdued demand.
• Sectoral Breakdown: Services PMI fell to 50.2%, the first contraction in 2023 since October, as pent-up demand from COVID-19 faded but employment minimally improved. Construction PMI rebounded to 55% due to fiscal stimulus, though new orders worsened.
• Economic Outlook: China's economy softened, with ongoing deflationary pressures from declining energy and commodity prices. GDP growth forecasts may need additional policy support for the 2024 target of 5%, with risks including low base effects and weak consumption.
• Policy Recommendations: Expect more expansionary fiscal policies, further monetary easing, and property sector support measures to stimulate growth. However, achieving 5% GDP growth in 2024 could be challenging.

Summary Content

• PMI Data: November manufacturing and services PMIs pointed to weak demand, with services entering contraction for the first time in 2023. Construction showed some recovery.
• Economic Trends: Ongoing deflation and employment pressures highlight potential growth slowdown. Policy focus is on fiscal and monetary stimulus.
• GDP Forecasts: Revised 2023 GDP growth maintained at 5.3%; 2024 target set at 4.8% with policy adjustments likely.