PMI points to a recovery in the manufacturing sector in 4Q24
Our observations
• Large and medium enterprises expand while small enterprises continue to contract but start to stabilize.
• Manufacturing output expands steadily.
• Overall market demand picks up.
• Manufacturers lower ex-factory prices of their products amid falling input prices.
• Employment in manufacturing sector slightly decreases.
Policy outlook
• Two important meetings in December 2024 have set the tone for China’s economic policy in 2025 as ‘more proactive and effective’.
• We expect the Chinese government to continue ramping up policy support for the economy and announce specific policy details in the coming weeks, which will help the Chinese economy navigate internal and external challenges.
Our forecasts for 1Q25
• We project a steady growth in manufacturing production.
• Headline PMI will fluctuate around 50.0 due to distortions caused by the Chinese New Year holiday.
• VAIO growth will reach 5.0%-5.5% yoy.
• Real GDP growth will come in at 4.8% yoy.
• Exports will register a low single-digit year-on-year rise.
• Year-on-year growth rates for the purchaser price index and the PPI will go up, due to a recent rebound in global commodity prices and a low comparison base in 1Q24