China’s small factory activity expanded in November at fastest pace in nearly three years
- Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rose to 51.8 from 51.7 in October, suggesting further signs of stabilisation amid the US trade war
- It is the fourth straight monthly rise and the fastest expansion since reaching 51.9 in December 2016, and it follows the stronger-than-expected official PMI data
Manufacturing activity in China’s small factories expanded for the fourth month in a row in November to the highest level in nearly three years, a private survey released on Monday showed, providing evidence that the economy may be heading for some stabilisation in the near term after weakening for most of the year.
The latest upturn in the health of the sector was partly supported by a further rise in new business placed with Chinese manufacturers
With both Caixin and official PMI data showing a reading above 50 – indicating expansion in sector activity – China’s manufacturing sector and economy may be finally showing signs of stabilisation.
“The latest upturn in the health of the sector was partly supported by a further rise in new business placed with Chinese manufacturers,” Caixin said in a statement. “A number of firms citing firmer underlying demand conditions. Demand from overseas also improved, with export sales picking up for the second month in a row.
“New business rose strongly, which underpinned a further solid increase in production. Notably, new export orders saw the first back-to-back monthly rise for over a year-and-a-half.”
If trade negotiations between China and the US 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, which works with Caixin on the report, warned that business confidence remained subdued, as firms’ concerns about government policies and their willingness to replenish stocks remained limited.