The Markit Manufacturing Purchasing Managers’ Index (PMI) continued to remain in the contraction region, where it has been since October 2018. The November Markit Manufacturing PMII came in at 49.5 from 49.3 in October, though the reading came in at a 14-month high. The demarcation between expansion and contraction is 50.

With manufacturing output and sales pointing towards the south, dragged by exports, it will continue to hurt the capex expansion. We expect 2019 GDP to come in around 4.5% with the upside at 4.7%. Growth will continue to be supported by private consumption and strong net exports.

• The Markit Manufacturing Purchasing Managers’ Index (PMI) continued to remain in the contraction region, where it has been since October 2018. The November Markit Manufacturing PMII came in at 49.5 from 49.3 in October, though the reading came in at a 14-month high. The demarcation between expansion and contraction is 50.

• The reading continues to endorse our view that overall business sentiment remains soft with the output index and new orders still in the contraction region despite a slight uptick towards the 50-mark demarcation. With manufacturing output and sales pointing towards the south, dragged by exports, it will continue to hurt the capex expansion.

• At the moment, it remains unclear if the PMI reading has bottomed out. External headwinds driven by trade tension and geopolitical noises are seen to be hurting global trade. We expect this to continue in 2020. Hence, the focus will be on domestic activities, which at the moment, we are seeing signs of weakening from both consumer and business sentiments.

• In our view, the overall economic performance will continue to be supported by private consumption with a moderate contribution from private investment. This would mean that our net exports will continue to present strong numbers as imports and in particular, capital imports will remain weak. On that note, we expect 2019 GDP to come in around 4.5% with the upside at 4.7%.

Source: AmInvest Research - 3 Dec 2019