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Chinese Manufacturing Activity Falls Back into Contraction in November

China’s factory activity slid back into contraction in November, with subdued demand, as well as rising unemployment and prices, weighing on manufacturers.

The Caixin manufacturing purchasing managers index (PMI), released earlier in the day, was at 49.9, just below the 50-mark indicating growth. It also was lower than the 50.6 figure reported in October, as well as the 50.5 predicted in forecasts prepared by Investing.com.

The findings from Caixin’s survey, which focuses more on small firms in coastal regions, contrasted with Tuesday’s data from the National Bureau of Statistics. The data showed the manufacturing PMI was at 50.1, while the non-manufacturing PMI was at 52.3.

“Supply in the manufacturing sector recovered, while demand weakened. Relaxing constraints on the supply side, especially the easing of the power crunch, quickened the pace of production recovery,” Caixin Insight Group senior economist Zhe Wang said in a statement accompanying the data release.

“But demand was relatively weak, suppressed by the COVID-19 epidemic and rising product prices.”

Although China initially staged an impressive economic recovery from COVID-19, a slowing manufacturing sector, debt woes in the property market, and COVID-19 outbreaks have all contributed to a slowdown.

Investors predict that a slowdown in gross domestic product recorded for the third quarter of 2021 to continue in the year’s last quarter.

The Caixin survey also showed that production expanded in November for the first time in four months, while new orders fell back into contraction.

Caixin’s Wang urged policymakers to focus on supporting small companies and pay attention to problems including deepening unemployment, limited household income growth, and weak purchasing power.

“In addition, the prices of some raw materials remained high. Enterprises are still facing high-cost pressures. Policymakers should treat inflation seriously,” he added.

Meanwhile, the Caixin services PMI is due later in the week.
Source: Investing

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