Weaker Q4 despite December rebound – Standard Chartered

Official manufacturing PMI returned to expansionary territory in December as new orders recovered m/m. The 2Y CAGR for real activity and trade likely picked up thanks to improved demand. CPI inflation may have edged higher to 0.9% y/y; CNY loans growth likely slowed further, Standard Chartered’s economists report.

External demand remained robust

“The December official PMI indicates a m/m recovery in manufacturing and construction activity for the month. The manufacturing PMI edged up 0.9pts to 50.1, posting the first above-50 reading since March on a jump in new orders and production PMIs. The equipment and consumer goods manufacturing PMIs both returned to expansionary territory. Meanwhile, the services PMI stayed below 50 for a second month in a row.”

“Export and import growth may have softened due to a base effect. The new export orders PMI jumped to a nine-month high of 49. We estimate that the monthly trade surplus widened to USD 113bn. The 2Y CAGR for industrial production (IP) likely accelerated on robust export-related production. The single-month contraction in fixed asset investment (FAI) may have eased due to the catch-up in projects towards year-end. Retail sales growth likely improved after a slump in November. Higher gold and silver prices may have boosted related jewellery retail sales.”

“Quarterly growth momentum likely weakened in Q4 due to a deeper investment contraction in infrastructure and real estate. Further, the front-loaded policy boost for consumer goods may have faded. Meanwhile, net exports likely continued to contribute positively to growth. We estimate Q4 GDP growth slowed to 4.2% y/y from 4.8% in Q3. Annual GDP likely grew 4.9% in 2025, meeting policy-makers’ target of around 5%.”