PMI points to downward pressure on the manufacturing sector in 2Q24 

Our observations

• Expansion of large enterprises decelerates while small and medium enterprises return to contraction.
• Manufacturing output growth moderates.
• Overall market demand deteriorates.
• Manufacturers lower ex-factory prices of their products. 
• Employment in manufacturing sector slightly decreases.

Policy outlook

• The Chinese government will continue to step up policy support for the economy. 
• It will front-load efforts to effectively put the established macro policies in place and continue to carry out a proactive fiscal policy and a prudent monetary policy.

Our forecasts for 3Q24

• We project a steady growth in manufacturing production.
• Headline PMI will gradually rise above 50.0.
• VAIO growth will register around 5.0% yoy.
• Real GDP growth will come in at 5.0% yoy.
• Exports will register a mid-single-digit year-on-year rise.
• Year-on-year growth rates for the purchaser price index and the PPI will go up, due to high global commodity prices lately and a low comparison base in 3Q23.