October PMI shows momentum growing in China manufacturing

BEIJING – Data released today by China may signal the end of persistent sluggishness in its industrial sector, according to a research note from ANZ Bank. It says strong manufacturing PMI numbers strengthen its belief in a change in China's growth momentum.

The official PMI number of 51.2 for October reflected a jump of 0.8ppt from 50.4 in September, resembling the +1.2ppt turnaround seen in March, ANZ says. “The current PMI value has now exceeded the average value of 50.4 between January 2013 and September 2016. It also represents the highest level since July 2014.”
The pace of capacity reduction in the steel and coal industries appears to have quickened in Q3, ANZ says.
“The Chinese Government aims to reduce 45 million tonnes of steel production capacity and 250 million tonnes of coal in 2016. Last week, the National Development and Reform Committee claimed that 80% of the targets for both sectors have been achieved by end-September, compared with 47% and 38% in July, respectively.
“Prices in the commodity market are reflecting this development, which bodes well for industrial profits and alleviates cash-flow pressures in manufacturing enterprises.” www.live.anz.com (ATI).