China_Another upside surprise in November Caixin manufacturing PMI

Summary of J.P. Morgan's Economic Research on China Manufacturing PMIs Industry Overview - Industry: Manufacturing in China - Date: December 2, 2024 Key Points and Arguments Manufacturing PMI Insights - The Caixin manufacturing PMI rose by 1.2 points to 51.5 in November, surpassing J.P. Morgan's forecast of 50.5 and the consensus of 50.6, following a 1.0-point increase in October [1] - The output component of the Caixin manufacturing PMI increased by 1.4 points to 53.2, while the new order component rose by 2.2 points to 52.9, indicating strong production and demand [1] - New export orders also saw a significant rise of 2.0 points to 51.5, marking the highest reading in seven months [1] Comparative Analysis of PMIs - Both Caixin and NBS manufacturing PMIs showed an uptick, suggesting a solid near-term manufacturing trend supported by domestic policy and front-loading of export orders due to anticipated tariff hikes [2][3] - The NBS manufacturing PMI output component gained 0.4 points to 52.4, driven by production in general equipment and automotive sectors [3] Employment and Pricing Trends - The employment component of the Caixin PMI rose by 0.7 points to 48.3, while the NBS employment component fell by 0.2 points to 48.2, indicating a mixed labor market condition [7] - Input prices in the Caixin PMI increased by 2.2 points to 52.3, while output prices rose by 1.1 points to 51.2, contrasting with the NBS where input prices fell by 3.6 points to 49.8 [7] Trade Policy and Economic Outlook - Concerns over potential US tariff hikes are influencing export activities, with a notable increase in export orders [3][7] - The Chinese government is shifting its export-related policies, reducing or canceling export tax rebates for various commodities, indicating a move towards industry consolidation and managing external trade conflicts [7] Future Economic Projections - J.P. Morgan forecasts a solid uptick in China's GDP growth to 6.9% quarter-on-quarter in Q4 2024, with a full-year growth forecast of 4.8% year-on-year [8] - The baseline scenario anticipates that average tariffs on imports from China may rise to 60% in Q1 2025, impacting growth projections for subsequent quarters [8] Conclusion - The overall signals from the manufacturing PMIs indicate a constructive outlook for China's manufacturing sector, supported by domestic policy measures and export demand amid trade uncertainties [8]