China’s manufacturing sector activity continued to shrink in November but the pace of deterioration was the weakest since June, survey results published by Caixin and Markit Economics showed Monday.
However, the official Purchasing Managers’ survey today revealed that the manufacturing sector contracted the most in three years.
The Caixin manufacturing Purchasing Managers’ Index rose to 48.6 in November from 48.3 in October. Economists had forecast the score to remain unchanged at 48.3 in November.
Although the reading has been below 50 for nine consecutive months signaling contraction, activity weakened at a slower pace compared to October.
“This indicates that pressure on economic growth has eased and fiscal policy has had a strong effect,” He Fan, chief economist at Caixin Insight Group said. “Overall, the economy is still on track to become more stable.”
Nonetheless, the official PMI fell to 49.6 in November, the lowest since 2012, from 49.8 in October. The expected score was 49.8.
Meanwhile, the non-manufacturing PMI rose to 53.6 from 53.1 a month ago.
At the hard data out later this month will signal that growth, which has been broadly stable recently, is now beginning to pick up, Julian Evans-Pritchard at Capital Economics, said.
The higher Caixin PMI reading was partly driven by a stabilization of output volumes in November. However, lower volumes of overall new orders continued to weigh on the PMI figure.
Data indicated that weaker domestic demand had acted as a drag on new order books of manufacturers, as new export business expanded at the fastest pace in 13 months.
Reflective of lower overall workloads, manufacturers reduced their purchasing activity again in November. Payroll numbers also decreased in November, albeit at the slowest rate since May.
Manufacturing companies signaled a further fall in average input prices in November amid widespread reports of lower raw material costs. Furthermore, the rate of reduction quickened to the sharpest in nine months.
In order to boost sales, companies passed on any savings to clients in the form of lower selling prices, survey showed.
The material has been provided by InstaForex Company – www.instaforex.com