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China PMIs: Encouraging
- November PMIs suggest that China’s manufacturing sector has bottomed out and is en route to recovery. In particular, the Export Orders sub-index of the PMI inched into expansion territory for the first time in six months.
- Still of concern however, are sub-expansionary readings for Employment and Import PMIs.
- Nevertheless, so as long the U.S. economy continues to grow and a full-fledged global financial crisis is avoided, China’s real GDP could grow 7.5%-to-8% range during the last quarter of 2012 and possibly pick up to 8%-to-8.5% in 2013.
- Policymakers’ stance should remain expansionary albeit limited given uncertainties. Any deep stimulus program should be regarded as a surprise.