China’s official PMI for October was released over the weekend and disappointed on two fronts. Not only did it miss expectations, it has also now established a rapidly fading trend in all key measures.
Most are still growing but less swiftly. The headline number fell from 51.1 to 50.8 points, output fell 53.6 to 53.1, new orders fell from 52.2 to 51.6 and new export orders fell into actual contraction from 50.2 to 49.9.
The mid year targeted stimulus is fading. Optimists will see the property market rebounding and October as the nadir of activity. That’s overly hopeful. The property market is entering a structural adjustment on selected city oversupply so stabilisation in the aggregate is the base case, leaving the PMI in need of more targeted stimulus!
