China's PMI Data Is Strong

    The official manufacturing PMI rose to 52.1 in November from 51.4 in October. This was higher than our forecast of 51.9. This good trend is expected to continue into the end of the year and the beginning of the new year. A strong economic recovery will allow the PBOC to begin returning to a neutral monetary policy stance, although the shift from a pro-growth stance will likely be a gradual and lengthy process.

    China's manufacturing PMI was stronger than expected in November, bolstering our confidence that the economic recovery will maintain its momentum. 

In the manufacturing data, both production and demand components recorded strong growth. Production indicators hit their highest level since October 2017.

Domestic demand is stronger than external demand. Overall demand, reflected by the new orders sub-index - rose 1.1% to 53.9, while external demand - reflected by new export orders - rose 0.5% points to 51.5.

    The improvement in companies of all sizes in the manufacturing industry is evident. A rise of more than 50 in the Small Business PMI means that both large, medium, and small businesses were in expansion territory in November.

The services PMI continued to climb, hitting its highest level since mid-2012.

The construction PMI rose to 60.5 from 59.8 the previous month. This likely reflects an acceleration in construction activity ahead of cold weather.

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