China | August PMIs continued to expand

Summary

The latest August manufacturing Purchasing Managers' Index (PMI) came at 51, slightly edging down from 51.1 in July, but remained in the expansionary territory. Caixin China PMI also improved significantly in August, indicating continuing recovery of manufacturing activities.

Key points

• Key points:
• The latest August Manufacturing Purchasing Managers' Index (PMI) came at 51 in Aug, slightly edged down from 51.1 in the previous month and lower than the market consensus of 51.2.
• By component, the slight decrease of Aug PMI was mainly dragged by the production index, partially affected by the floods in the Southern part of China where half of the agriculture produced.
• By enterprise size, the PMIs of large and medium-sized enterprises remained in the expansionary region, while smaller firms dropped further into contraction territory.
• Although manufacturing activities continued the recovery momentum, the challenges remain.
• We maintain our baseline scenario that China's economy will undergo a V shape recovery, the GDP growth rate will steadily climb up to 5% in Q3 and 6% y/y in Q4, concluding 2020 with a full-year growth outturn of 2.2%.

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