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BEIJING (Reuters) – China’s manufacturing activity expanded at the fastest pace in more than three years in November, while growth in the services sector also hit a multi-year high as the economic recovery in the US accelerated. country of the coronavirus pandemic.
Optimistic data released Monday suggests that the world’s second-largest economy is on track to become the first to completely shed the burden of widespread industry shutdowns, with recent production data showing that manufacturing is now on the decline. pre-pandemic levels.
China’s official Manufacturing Purchasing Managers Index (PMI) rose to 52.1 in November from 51.4 in October, data from the National Bureau of Statistics showed. It was the highest PMI reading since September 2017 and remained above the 50-point mark that separates growth from contraction on a monthly basis. It was also higher than the median forecast of 51.5 in a Reuters analyst poll.
“The rise in the manufacturing PMI for November, with general improvements in the sub-indices, suggests that the recovery momentum in the industrial sector has become more certain,” Zhang Liqun, analyst with the China Federation of Logistics and Purchasing.
But the results also showed that inadequate demand is still a common problem companies face. We need to consolidate support for policies aimed at expanding domestic demand ”.
China’s first-class stock index hit a 5 1/2 year high on the rapid data.
The robust overall PMI points to strong growth in the fourth quarter, which Nomura analysts expect to accelerate to 5.7% yoy, from 4.9% in the third quarter, an impressive turn from the deep contraction in early this year.
The economy is expected to expand around 2% throughout the year, the weakest in more than three decades, but still much stronger than other major economies struggling to control their coronavirus outbreaks.
The official PMI, which focuses mainly on large state-owned companies, showed that the sub-index for new export orders stood at 51.5 in November, improving from 51.0 the previous month. That bodes well for the export sector, which has benefited from strong foreign demand for medical supplies and electronics.
Strong e-commerce shopping promotions also contributed to activity in November, unleashing strong consumer demand and boosting the confidence of small and medium-sized businesses.
But a rising yuan and more lockdowns in many of its key trading partners could put pressure on Chinese exports, which have been surprisingly resilient so far.
More companies have reported the impact of currency fluctuations, compared to a month ago, said Zhao Qinghe, a senior statistician at the NBS.
“Some companies have pointed out that as the yuan continues to rise, corporate profits are under pressure and export orders are declining,” Zhao said.
He added that the recovery in the manufacturing industry remained uneven. For example, the PMI for the textile industry has remained below the 50 point threshold, which points to weak business activity.
RETURN OF THE CONSUMER
In the services sector, activity expanded for the ninth consecutive month. The official Non-Manufacturing Purchasing Managers Index (PMI) rose to 56.4, the fastest since June 2012 and rose from 56.2 in October, as consumer confidence accelerated amid few COVID-infections. 19.
Rail and air transport, satellite transmission services and telecommunications and the financial industry were among the best performing sectors in November.
A sub-index for construction activity stood at 60.5 in November, improving from 59.8 in October, as China steps up spending on infrastructure to revive its economy.
Monday’s data also showed that the job market is still under stress. Service companies cut payroll at a faster pace in November, the data showed, while factories cut staff for the seventh month in a row, albeit at a slower pace.
“The continued recovery reduces the need for further monetary easing, but a shift towards tighter tightening is also unlikely given continued pressure from the labor market,” said Erin Xin, HSBC Greater China Economist.
Reporting by Stella Qiu and Ryan Woo; Additional reporting by Colin Qian; Edited by Sam Holmes and Lincoln Feast
