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Chinese growth slowing down? – Danske Bank

FXStreet (Edinburgh) - Flemming Nielsen, Senior Analyst at Danske Bank, assesses the recent results from the official Chinese PMI.

Key Quotes

“China’s official manufacturing PMI released by the country’s National Bureau of Statistics (NBS) was unchanged at 51.1 (consensus: 51.0, DMB: 50.8) in September compared with August”.

“The relatively resilient manufacturing PMIs suggest that China is currently not facing a severe slowdown as indicated by the very weak hard data for August”.

“In our view, China is currently in a phase where the economy is again losing some momentum due primarily to weaker credit growth and investment demand, but some of this weakness in investment demand appears to be offset by relatively resilient private consumption and in particular some improvement in exports”.

“We still expect the manufacturing PMIs to move moderately lower in the coming months but the current relatively strong details do not suggest we should expect a substantial decline”.

“With mainly downside risk on growth, China still has an easing bias on fiscal and monetary policy”.

“However, the manufacturing PMIs do not suggest the slowdown is severe enough for the Chinese government to implement substantial new easing measures. Hence, China is likely to stick to its current strategy of modest ‘targeted’ easing measures if needed”.

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