China PMIs: A Rebound From Low Levels

China’s Caixin Manufacturing PMI rebounded one point in October to 50.3. This was in line with the NBS PMIs from earlier this week, which also showed a modest rebound.

We are looking for a turning point in China as the government unrolls stimulus measures. This Caixin rebound is not that turning point, as the manufacturing PMI has been gyrating along the boom-bust line for nearly two years.

Our Emerging Markets and China strategists believe investors should follow measures like credit demand, housing sales, and the number of anti-corruption investigations to assess whether China’s policy announcements are reviving animal spirits. Until then, data gyrations are noise. We recommend investors maintain a risk-off stance in a global portfolio, as China’s stimulus measures has not met the threshold needed to reflate the global economy.