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After a slight rebound, Chinese business sentiment falls again

Summary:
Latest data point toward continued deceleration in China in February, especially in the external sector.Chinese official manufacturing and non-manufacturing purchasing manager indexes (PMI) fell again in February, following a pause in January. The manufacturing PMI came in at 49.2, down from 49.5 in the previous month. The non-manufacturing PMI, while continuing to signal expansion, also fell in February—to 54.3, from 54.7 the previous month.The data show a divergence between the performances of large enterprises and small- and medium-sized enterprises (SMEs), suggesting that the government’s stimulus so far has mainly benefited the former.After a rebound in January, trade activity remained weak, with the new export and imports orders sub-indexes falling again in February.On the domestic

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Latest data point toward continued deceleration in China in February, especially in the external sector.

Chinese official manufacturing and non-manufacturing purchasing manager indexes (PMI) fell again in February, following a pause in January. The manufacturing PMI came in at 49.2, down from 49.5 in the previous month. The non-manufacturing PMI, while continuing to signal expansion, also fell in February—to 54.3, from 54.7 the previous month.

After a slight rebound, Chinese business sentiment falls again

The data show a divergence between the performances of large enterprises and small- and medium-sized enterprises (SMEs), suggesting that the government’s stimulus so far has mainly benefited the former.

After a rebound in January, trade activity remained weak, with the new export and imports orders sub-indexes falling again in February.

On the domestic front, the picture is mixed. The production sub-index slid into contraction territory (49.6) in February, compared to 50.9 in January. The employment sub-index moved lower from the previous month and also signals a contraction in activity.

Overall, the latest PMI report is consistent with our expectation for further deceleration of the Chinese economy, despite the encouraging credit growth in January. We maintain our view that growth may continue to decelerate in H1 2019 before staging a modest rebound in H2.

About Dong Chen
Dong Chen
Dong Chen is senior Asia economist, Pictet Wealth Management. - Twelve years of working experience in macroeconomic research - Extensive knowledge about asset allocation and multi-asset class portfolios - Rich client-facing experiences with high-net-worth clients across Asia - Rigorous training in economics and comprehensive knowledge about Asian economies and business - Strong analytical skills and solid background in statistical/econometric analysis - Strong communication / presentation skills - Native Mandarin Chinese speaker and fluent in English Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

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