Divided opinions on China’s December data reflect 2017 uncertainty
Manufacturing and non manufacturing PMIs were solid at year end, but what comes next?
Mainland Chinese economic data for December was reasonably solid, suggesting the economy had a steady end to the year, but divisions among economists suggest further uncertainty ahead.
The official manufacturing PMI fell to 51.4 in December from 51.7 in November, but remained well above the threshold of 50 that separates expansion from contraction. Meanwhile the non-manufacturing PMI dropped from its two year high of 54.7 in November, but only as far as 54.5.
Se Yan, Standard Chartered Bank’s senior economist for China, offered up a positive reading of these figures in a research note. “The PMI readings suggest that growth momentum continued in December on strong domestic and foreign demand, a rising PPI and supportive policies,” he said.
Yang Zhao, chief China economist at Nomura, looked at it differently.
“[The] data suggests growth momentum moderated slightly in December,” he wrote in his report analysing December’s indicators. “Moreover, the quality of growth seems to have deteriorated further, as the official PMI for small enterprises fell further into contractionary territory,” Yang added.
Although evidence on growth slowdown has yet to surface, we don’t think there is much upside on growth in the near future
Helen Qiao, China economist at Bank of America Merrill Lynch, split the difference, saying that the data was fairly good, but it wouldn’t matter either way.