China: Growth likely slowed to 6.5% in Q3 – Standard Chartered

Analysts at Standard Chartered points out that China’s official manufacturing PMI fell 0.5ppt to 50.8 in September, the lowest reading since February.

Key Quotes

“Production activity slowed on deteriorating export performance. New export orders PMI fell to a 31-month low of 48.0, suggesting worsening sentiment on escalating trade tensions. On the other hand, non-manufacturing PMI picked up to a three-month high of 54.9 in September, thanks to a recovery in construction activity.”

“Trade data likely worsened in September. We expect export and import growth to have eased further.”

“We expect retail sales to have improved further on solid demand and higher CPI inflation, which probably jumped in September on a temporary surge in food inflation. We expect Q3 GDP growth to have moderated to 6.5% y/y from 6.7% in Q2.”

“FX reserves may have declined by c.USD 10bn in September on a stronger USD and rising treasury yields. We expect M2 growth to have edged up to a year-to-date high of 9.2% y/y in September on liquidity injection and fiscal deposit. Total social financing (TSF) growth likely stabilised, keeping pace with nominal GDP growth.”