November PMIs point to further slowdown – ABN AMRO

November PMIs point to further weakening of growth momentum. Both manufacturing PMIs in contraction territory, divergence narrows. Services and composite PMIs also came down. More targeted support expected to safeguard GDP growth in 2026, ABN AMRO’s Senior Economist Arjen van Dijkhuizen reports.

Both manufacturing PMIs now in contraction territory

“China’s PMIs for November published over the past couple of days confirm a further weakening in growth momentum, on balance. To start with the manufacturing side, the official index published by NBS on Sunday rose modestly to 49.2, (October: 49.0), but a bit less than expected (consensus: 49.4). This marked the eight consecutive month that this index remained below the neutral 50 mark separating expansion from contraction.”

“Meanwhile, the official non-manufacturing PMI resumed its downward trend, dropping to below the neutral mark (49.5) for the first time since China’s messy Zero-Covid exit end-2022 (October: 50.1, consensus: 50.0). This was driven by the services sectors, partly reflecting the fading of a holiday-related spending boost in October.”

“All in all, the November PMIs, coupled with the latest hard macro data, paint a picture of the Chinese economy losing further steam as we near the end of the year. While the 2025 GDP growth target of around 5% is still within reach, we think the government will add further targeted stimulus and resume piecemeal monetary easing to safeguard GDP growth next year. Particularly against the background of ongoing US-China power play, it is unlikely that Beijing would tolerate a sharp deceleration in annual GDP growth in 2026.”