China: Improving PMIs versus weak hard data – ABN AMRO

Arjen van Dijkhuizen, senior economist at ABN AMRO, points out that China’s PMIs for November published over the past few days showed a clear improvement.

Key Quotes

“The official manufacturing PMI published on Saturday rose to an eight-month high of 50.2 (October: 49.3, consensus: 49.5) and the non-manufacturing PMI jumped to 54.4 (October: 52.8, consensus: 53.1).”

“On Monday, Caixin’s manufacturing PMI came in at 51.8 (October: 51.7, consensus: 51.5), the highest reading since 2016. Caixin’s PMI – with a relatively strong coverage of the private sector – started rising back in July, possibly reflecting that Beijing’s piecemeal easing campaign is targeted at the private sector. While the PMIs suggest growth momentum is improving, the latest hard data (for October) were not encouraging.”

“Industrial production growth fell back to 4.7% yoy. Growth of retail sales dropped to 7.2% yoy, the weakest pace since 1999. Fixed investment slowed to 5.2% yoy, the lowest number on record. Growth of imports and exports also remained in negative territory, new lending volumes came down and industrial profits reached the weakest number since 2011 (-9.9% yoy).”

“The discrepancy between improving business confidence and weak hard data does seem to be, at least in part, related to the (twists and turns in the) US-China conflict. The export sub index in the latest official PMI survey rose by almost two points, possibly supported by rising expectations that the tariff tit-for-tat has come to an end. That said, the Phase One deal announced in early October still has to be signed and many uncertainties remain, for instance on how much rollback on existing tariffs could be agreed on and under what conditions (such as an enforcement mechanism).”

“All in all, assuming no further stepping up in US-China tariffs, we expect a bottoming out in industry next year. That will help the Chinese economy stabilise: we expect official GDP growth to slide only marginally to 5.8% in 2020, from 6.0% yoy seen in Q3-2019.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

GBP/USD off 7-month highs, still firmer as Tories hold the lead

GBP/USD retraces from the new seven-month highs of 1.3180 but remains strongly bid, as weekend polls have reaffirmed a solid lead for PM Johnson's Conservatives. Cable dropped on Friday amid upbeat US data.


EUR/USD steadying above 1.1050 amid upbeat German export data

EUR/USD is trading above 1.1050, attempting a recovery after Germany reported an increase in exports in October. EUR/UDS dropped sharply on Friday amid upbeat US Non-Farm Payrolls and weak German industrial output. 


Forex Today: US-Sino trade tensions prevail, Boris closer to victory, EUR/USD licking its wounds

Trade talks: President Donald Trump has called on the World Bank to stop lending to China, a move that may aggravate tensions, with only six days to go until Washington is set to slap new tariffs on Beijing. Negotiations continue.

Read more

Gold: Sidelined after biggest daily decline in four weeks

Gold is lacking a clear directional bias in Asia, having registered its biggest single-day decline in four weeks on Friday. China's data may embolden President Trump to take more aggressive measures. 

Gold News

USD/JPY in search of a firm direction, stuck in a range above mid-108.00s

USD/JPY was seen oscillating in a narrow band and consolidated last week’s losses. US-China trade uncertainties continued underpinning the JPY’s safe-haven status. Investors now seemed reluctant ahead of the latest FOMC monetary policy update.