PMI points to steady growth in manufacturing production and economic activity in 2Q21
Our observations
The recovery of small enterprises continues to lag behind that of large and medium enterprises.
Manufacturing production continues its stable expansion.
Overall market demand improves despite a fall in new export orders.
Manufacturers raise ex-factory prices of their products amid high cost pressures as prices of production inputs continue to rise.
Manufacturing employment remains steady.
Policy outlook
The Chinese government will maintain necessary policy support for the economy.
The proactive fiscal policy will be implemented thoroughly to help optimize China’s economic structure. Meanwhile, the prudent monetary policy will be adopted to maintain reasonably sufficient liquidity, so as to provide stronger support for the real economy and key areas and weak links in the economy.
Our forecasts for 3Q21
We project a further expansion of manufacturing production and economic activity in 3Q21.
The headline PMI will stay above 50 and fluctuate around 51.0.
Real GDP growth will top 6.0% yoy.
VAIO growth will surpass 7.0% yoy.
Exports will grow by 10% yoy.
Year-on-year growth rates for both the purchaser price index and the PPI will moderate.