China: The official PMI remains above 50 in September - Nomura

Research Team at Nomura, notes that the China’s official manufacturing PMI remained above the expansion/contraction threshold of 50 in September; it was unchanged at 50.4 from August and in line with market expectations (Consensus: 50.4; Nomura: 50.5).

Key Quotes

“By component, the output sub-index rose by 0.2 percentage points (pp) to 52.8, the employment sub-index rose by 0.2pp and the purchasing price sub-index rose by 0.3pp. However, the new orders sub-index fell by 0.4pp to 50.9, while the new export orders sub-index rose by 0.4pp to 50.1, which suggests that, although domestic demand remains robust, the sequential expansion was not as strong as in August.

By enterprise category, the PMI for large enterprises continued to rise, up 0.8pp to 52.6 in September. However, the PMIs for medium-sized and small enterprises fell by 0.7pp and 1.3pp, respectively, to 48.2 and 46.1, far below the expansion/contraction threshold of 50. The data suggest that the imbalances in the economic structure are deteriorating further rather than improving.

Today’s above-50 official PMI release is largely consistent with the Caixin PMI released yesterday (see China: The Caixin PMI rises in September, 30 September 2016), and provides further evidence that growth momentum improved in September. However, the long-term story of a slowdown remains intact, in our view, given the unbalanced economic structure.”