Official manufacturing PMI improved modestly to 49.2 in November, indicating still-soft momentum. Production activity likely stayed steady, while investment may have contracted further. Base effect likely boosted retail sales growth; trade growth may have improved on easing trade uncertainty. CPI inflation likely edged up to 0.8% y/y; credit growth may have remained stable, Standard Chartered's economists Hunter Chan and Shuang Ding report.

Domestic momentum remained soft

"The official manufacturing PMI improved to 49.2 in November, after falling to a six-month low of 49 in October. The recovery was partly due to the new US-China trade agreement, which lowered fentanyl tariffs by 10% and suspended port fees and other trade restrictions, such as on rare earths. The new export orders PMI rebounded 1.7pts while the new orders PMI rose by only 0.4pts, indicating weak domestic demand. In addition, the production PMI posted a weak recovery to 50. Household demand may have softened, with the services PMI falling to a 23-month low of 49.5."

"Export and import growth may have surged in November partly on a base effect and partly the extended trade truce. The monthly trade surplus likely widened. We think industrial production (IP) growth was steady on a 2Y CAGR basis, supported by the export recovery. Meanwhile, fixed asset investment (FAI) may have declined further, but at a slower pace. The real estate investment contraction likely eased in November. Interim data shows home and land sales picked up m/m. The construction PMI also rallied to a four-month high, hinting at improved infrastructure project implementation."

"We estimate CPI inflation edged up to a near-three-year high of 0.8% y/y in November mainly on base effects and higher food inflation. PPI deflation may have continued to moderate to 1.9% y/y, partly reflecting the impact of the “anti-involution” campaign. We expect money and credit growth to have remained steady compared to October. While loan demand likely stayed soft towards year-end, government and corporate bond financing expanded, according to interim data."