Most interesting finding by NBF’s excellent Economics and Strategy Group:
Chinese manufacturing data surprised on the upside in October, with the HSBC PMI index rising to a 6-month high of 54.8 on a seasonally adjusted basis. Importantly, an increasing share of the growth in Chinese factory output appears to be going towards satisfying domestic demand. Indeed, the new export component edged up to 51.5 in October from 50.8 the month before. As today’s Hot Chart shows, China appears to be decoupling from the business model of the mid-2000s when most of the growth in the PMI was driven by the new export orders component. Also, it is worth noting that despite the push in output, unfilled orders and inventories actually declined on the month. In other words, the goods produced are being sold.