China GDP growth may top 5.5% in Q4, says ANZ

HONG KONG - Strong PMI prints in November indicate a high possibility that China's GDP growth may return to above 5.5% y/y in Q4, according to ANZ Bank. It says a broad improvement is seen across sectors, particularly for small enterprises, whose PMI climbed to 50.1, above the breakeven threshold. For the manufacturing sector, the production and new orders sub-indices moved to 54.7 and 53.9, the highest levels year to date, suggesting a recovery in both supply and demand.

China's electronics and IT-related sector continued to lead the rebound. Among the non-manufacturing sectors, transportation, telecom, and financial out-performed in the month.

ANZ says the construction sector's PMI also moved higher, to 60.5 in November, up 0.7% from last month,and that the rebound in input and output prices suggests that industrial deflationary risks may have dissipated.

"Thanks to the rebound in global commodity prices, including coal and oil, input and output price sub-indices in the manufacturing sector jumped to 62.6 and 56.5 in November from 58.8 and 53.2 prior. A similar trend is seen in the non-manufacturing sector," ANZ says.

" This reinforced our view that deflationary risks in the industrial sector may have dissipated, allowing China's monetary policy to gradually normalise, and shift its focus to structural issues."

Yuan appreciation and potential sanctions from the US present some risks to China's external sector, the bank added. www.live.anz.com (ATI).