China Manufacturing PMI Gauge Signals Pickup in Growth
The Caixin manufacturing purchasing managers index rose to 51.5 in November, compared with 50.3 in October
A private gauge of China’s manufacturing activity signaled that the sprawling sector continued to expand in November, as Beijing’s efforts to revive growth helped stabilize the economy.
The Caixin manufacturing purchasing managers index rose to 51.5 in November, compared with 50.3 in October, according to data released by Caixin Media Co. and S&P Global on Monday. That marked a second straight month of expansion and the fastest pace of growth since June, Caixin said.
A reading below 50 suggests activity is shrinking and one above indicates that it is expanding.
Growth in supply and demand both accelerated last month, with manufacturers’ output continuing to expand as demand strengthened, the survey showed. In a positive sign amid China’s continued struggles with deflation, demand was solid enough that manufacturers raised prices and passed on some costs.
The gauge for total new orders touched a high not seen since February 2023, and external demand also bounced back, in part due to some overseas clients upping purchases after the U.S. election, said Wang Zhe, senior economist at Caixin Insight Group.
Sentiment among manufacturers improved, with business confidence rising to an eight-month high as firms signaled hopes that better economic conditions and government policies can support sales in the year ahead, Caixin said.
That’s a positive development amid rising uncertainty stemming from the prospect of higher U.S. tariffs on imported goods that could spark retaliation that will disrupt global trade.
Despite the upbeat survey readings, Wang noted that the Chinese economy still faces downward pressure, pointing to a continued contraction in manufacturing employment, which indicates that the effect of stimulus has yet to be felt in the labor market.
“While the economic downturn appears to be bottoming out, it needs further consolidation,” and businesses’ confidence in expanding their workforce needs to be strengthened, Wang said.
Sufficient policy buffers will be needed to cushion against economic headwinds at home and abroad. How consistent and effective additional stimulus measures are will merit close attention, the economist said.
Monday’s readings are in line with China’s official gauge for manufacturing activity, which also edged up last month. The official PMI came in at 50.3 in November, up from 50.1 in October, according to data released Saturday by the National Bureau of Statistics.
Signs of better economic growth momentum and bright spots in high-frequency indicators like PMIs could mean that China’s economic growth goal of around 5% for the year is within reach, some economists say. But a more challenging external environment due to potential tariff hikes by the U.S. have added uncertainty to the outlook.
That will sharpen focus on China’s upcoming Central Economic Work Conference in December, where policymakers will discuss the priorities for the world’s second-largest economy in 2025.
Citi economists expect the closely watched event to signal that China will stick to its “around 5.0%” GDP target.
Domestic policy support will be essential once external headwinds start to kick in, they said in a Sunday note, expecting to see supportive monetary and fiscal measures with a focus on consumption.