China's manufacturing PMI rises to 52.1 in November

The purchasing managers' index (PMI) for China's manufacturing sector came in at 52.1 in November, up from 51.4 in October, the National Bureau of Statistics (NBS) said Monday.

The figure marks the ninth consecutive month above of the benchmark of 50 that indicates an expansion in activity on a monthly basis, and beats the estimation of 51.5, which is the median forecast of 22 economists polled by Reuters earlier.

As a pronounced result of bolstering prevention works against the COVID-19 pandemic, China's economy continues to steadily pick up, said Zhao Qinghe, senior statistician at the NBS, adding that "among the 21 industries surveyed, the number of sectors holding PMI in the expansion range increased to 19, and the manufacturing outlook is booming."

"PMI has continued to beat market expectations, suggesting strong momentum in China's economic recovery," Wang Dan, chief economist at Hang Seng Bank, told CGTN.

In a breakdown, both supply and demand contributed to the figure's rise.

"The improvement was broadly based but led mainly by production and new orders of sub-indices," said Lu Ting, chief China economist at Nomura.

The production index and the new order index were 54.7 and 53.9 in November, increasing 0.8 and 1.1 percentage points on a monthly basis, reaching the high points of the year, according to Zhao.

Imports and exports picked up steadily. The new export order index and import index are 51.5 and 50.9, increasing 0.5 and 0.1 percentage points respectively compared to last month, Zhao added.

"Foreign new orders improved despite the recurring coronavirus, driven by holiday demand and the reopening of businesses and schools in the U.S. and Europe," said Wang.

The rise in new export order index suggested "strong demand for Chinese products from overseas economies as they remain mired in the pandemic," said Lu.

However, an extended pandemic outside of China may eventually dampen demand for China's exports if the purchasing power in overseas economies diminishes and they adjust their manufacturing production to the new normal, Lu added.

The price index rose sharply. With the recent general rise in commodity prices and the acceleration of production and procurement activities by enterprises, the purchasing prices of raw materials and product sales in the manufacturing industry have increased significantly this month. The purchase price index and ex-factory price index of major raw materials were 62.6 and 56.5, 3.8 and 3.3 percentage points higher than last month, respectively.

Enterprises in different scales keep recovering. The PMI of large, medium and small enterprises were 53.0, 52.0 and 50.1, increasing 0.4, 1.4 and 0.7 percentage points on month-on-month basis, respectively.

"Small firms remain under stress as their unemployment kept shrinking. The rebound of consumption is too weak to sustain a broad recovery in [the] private sector. With the economy gathering steam in the coming months, demand for liquidity will increase, especially from small firms," Wang told CGTN.

However, despite the above positive changes, the recovery of the manufacturing industry is still uneven. The PMI of the textile and apparel industry has been below the benchmark, and the industry's outlook is still weak, said Zhao.

The official non-manufacturing PMI rose further to 56.4 in November from 56.2 in October, mainly led by a rise in the sub-index for the construction sector, which was bolstered by the stimulus introduced earlier this year, although funds and projects might only have become available in the past couple of months, noted Lu.

Service activities were up significantly, particularly in construction, transportation, finance and IT services. Yet housing market remained tame as markets expect the restrictive policies to stay in place, according to Wang.

"We expect China's official manufacturing PMI to remain solid at around 51-52 in coming months, while the official non-manufacturing PMI may slide a bit on a high base," said Lu.

Wang predicts the monetary policy to remain accommodative to support the recovery.

China's economy is expected to expand around 2 percent for the full year. Although it would be the weakest in over three decades, it's still much stronger than other major economies that continue to battle COVID-19 infections. Also, China is projected to be the only country to see positive growth this year.

China's October manufacturing PMI at 51.4, continues recovery

(Cover: A worker wearing a face mask works on a production line manufacturing bicycle steel rims at a factory in Hangzhou, Zhejiang Province, China, March 2, 2020. /Reuters)