The author is ANZ Greater China chief economist Li-Gang Liu
China’s official PMI rose for the third consecutive month, at 51.1 in September, below market expectations, suggesting that China’s manufacturing sector, especially the state-owned enterprises, continued to expand despite at a slower pace.
However, the HSBC PMI final number was much lower than the flash reading in September, bringing about concerns that the small and medium enterprises (SMEs) sector could have slowed.
It is worth noting that our ANZ China Commodity Index (CCI) also witnessed a significant pullback in the past two week, led by energy and bulk products, indicating that the demand for commodities has softened somewhat.
Furthermore, we have not seen significant re-stocking activity in China though the economic momentum accelerated in the past two months.
Combining these factors, we hold a cautiously optimistic view over the economic outlook, and believe that China’s third quarter economic growth could be around 7.5%.
We also maintain our forecast that China’s economy will expand 7.6% this year.