China: Official PMI dips in December - Nomura

According to the Asian Economics Team at Nomura, the decline in the official Chinese PMI on Dec 31st, 2017 suggests a moderation of economic activity in December.

Key Quotes

China’s official PMI dipped to 51.6 in December from 51.8 in November, in line with market expectations (Consensus: 51.6; Nomura: 51.8; Figure 1). By company size, the dip was mainly driven by small-sized enterprises , the PMI oh which fell by 1.1 percentage points (pp) to 48.7. The PMI ticked down by 0.1pp for medium-sized enterprises and it rose by 0.1pp for large enterprises, with both remaining above the expansion/contraction threshold of 50.

The five components of the official PMI (output, new orders, raw material inventory, employment, and supplier delivery time) dropped, with the drop varying from 0.2pp to 0.4pp. Sub-indices of both input and output prices rose, which is a bit surprising as we expected inflationary pressures on the supply side to fade amid the economic slowdown. Also, the new export orders sub-index rose in December.