China’s Manufacturing Sector Logs Moderate Expansion
China’s manufacturing activity expanded at a moderate pace in November, but this was the strongest growth since December 2016, survey data from the IHS Markit showed Monday.
The Caixin manufacturing Purchasing Managers’ Index rose slightly to 51.8 from 51.7 in October. The reading signaled an improvement for the fourth consecutive month and the strongest since December 2016.
According to official survey, released over the weekend, the manufacturing sector returned to growth in November. The PMI advanced to 50.2 from 49.3 and the non-manufacturing PMI advanced to 54.4 from 52.8.
The latest upturn was partly underpinned by a further rise in new business placed with Chinese manufacturers. Despite easing from October, the rate of new order growth remained solid overall.
Reflecting an increase in demand from overseas, export sales picked up for the second month in a row, survey from Markit revealed. Although marginal, it marked the first back-to-back increase in foreign orders since early 2018.
In response to rising new workloads, manufacturers increased their production again in November. After falling for seven straight months, employment was broadly stable midway through the final quarter.
To accommodate higher production, firms increased their buying activity at the strongest pace since January 2018, adding pressure on supply chains.
Higher buying activity also contributed to an increase in stocks of purchases. On the price front, data showed that overall inflationary pressures remained weak, with average cost burdens rising only slightly while output charges declined again.
Chinese goods producers generally expect output to increase over the next year, though confidence slipped to a five-month low amid concerns of an uncertain outlook and the implementation of stricter environmental policies.
If trade negotiations between China and the U.S. can progress in the next phase and business confidence can be repaired effectively, manufacturing production and investment is likely to see a solid improvement, Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group said.
The survey data improved across the board last month, hinting at a pick-up in growth momentum, Julian Evans-Pritchard, an economist at Capital Economics, said. But the economist said he doubts this marks the start of a decisive rebound in activity.
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