Link Securities | China’s official manufacturing purchasing managers’ index, manufacturing PMI, came in at 50.3 in November, versus 50.2 expected by the analyst consensus and following 50.1 in the previous month, for its second consecutive month in expansionary territory. We recall that a reading above 50 points indicates expansion of activity with respect to the previous month, while a reading below that level indicates contraction.
Production and new orders showed a rebound in growth, while export declines slowed. The automobile sector was among the standouts, with output and new orders above 54.0 points. Likewise, inflation indicators softened, with input prices reversing to declines, following the previous month’s rebound, while prices charged to the public accelerated their fall.
In contrast, China’s non-manufacturing purchasing managers’ index, the non-manufacturing PMI, came in at 50.0 points in November, versus 50.3 points expected by the consensus, and following 50.2 points in October.
Activity in this sector has remained close to neutral territory since July. The main drag was the construction sector, which moved into contractionary territory, in contrast to the stability of the services sector.
Finally, China’s composite purchasing managers’ index, the composite PMI, came in at 50.8 points as a result. The findings were moderately positive, as the macroeconomic data released increased signs of recovery attempts, since the series of stimulus announcements began. However, most of the focus is on potential tariff hurdles next year under the incoming administration of Donald Trump.
Separately, China’s manufacturing purchasing managers’ index, the manufacturing PMI compiled by media group Caixin, rose in November to 51.5 points, up from 50.3 points in October, beating consensus forecasts of 50.5 points in what is the second consecutive month of improvement. We recall that a reading above 50 points indicates expansion of activity with respect to the previous month, while a reading below that level indicates contraction.
It also represents the strongest expansion in manufacturing activity since June, driven by the strongest growth in foreign orders since February 2023, and a renewed increase in exports. In addition, production growth accelerated, reaching its strongest level in five months. Purchasing levels and procurement inventories grew, as companies built safety inventory. However, employment contracted for the third consecutive month, although the rate of decline was modest, and job backlogs accumulated for the second month in a row.
Lead times stabilized, having increased over the past five months. In the price segment, input prices rose to their highest level in five months, due to an increase in raw material prices. Meanwhile, selling prices saw their highest increase since October 2023.
Finally, confidence rose to an 8-month high on hopes for better economic conditions, and support for the government policies.
