China's industry kicks off in November

Daniel Fowler
December 2, 2019

It was the first time since April that this key gauge of manufacturing activity registered above the 50 mark.

The official manufacturing purchasing managers' index rose to 50.2, Chinese National Bureau of Statistics data released yesterday showed.

China's factory activity rebounded for the first time in seven months in November, data showed on Saturday, despite the looming threat of the new U.S. tariffs in few weeks if Beijing and Washington fail to sign a partial trade deal. A Reuters poll of analysts showed November PMI is expected to come at 49.5.

A GAUGE of China's manufacturing sector jumped unexpectedly in November, signalling a recovery in activity amid government support and a stabilising global economy.

A component measuring new export orders had the first back-to-back monthly increase for over a year-and-a-half, Caixin and Markit said in a statement. Factory output rose to 52.6 in November, marking the strongest pace since March.

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To help avert a sharper slowdown, China has brought forward 1 trillion yuan (S$194.6 billion) of the 2020 local government special bond quota to this year.

But the latest report also says the manufacturing sector is still facing downward pressure.

High-tech manufacturing and the manufacturing of equipment and consumer goods also saw expansion over two consecutive months, showing that the economy is on a transformative track toward high-quality growth and a consumption-driven model, Zhao said. A sub-index of new export orders climbed to a 7-month high at 48.8, but was still in contraction as demand wanes for China's exports overseas.

US President Donald Trump said this week that the world's largest economies are close to reaching agreement on the first phase deal.

PMI surveys also indicated factories continued to cut jobs in November despite a slightly improved business confidence, while it implies a further decline in profits for Chinese manufacturers, with output prices fell to the lowest level in three months. This reflects concerns about the prolonged trade negotiations, and Washington's recent passing of a law supporting human rights and democracy in Hong Kong. They PMI index recorded the strongest gain in November, compared with mid-sized companies and large, but they are still the poorest performance of the three in 49.4.

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