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Andrew Mullen

1. Manufacturing improvement ‘broad-based’
China’s official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – rose to 50.3 in November compared with October’s reading of 50.1.
The gauge hit a seven-month high and remained above 50 - which separates expansion from contraction - on a monthly basis.
The index had contracted for five straight months before October.
The manufacturing export order subindex rose to 48.1 in November, compared with 47.3 in October.


The Caixin/S&P Global manufacturing PMI, meanwhile, also rose to 51.5 in November from 50.3 the previous month, reaching its highest level since June.
“We think it makes sense to average across both PMIs to gauge conditions in industry. On this basis, the headline reading rose from 50.2 to 50.9, a seven-month high,” said Gabriel Ng, assistant economist at Capital Economics.
“The breakdown of the surveys suggest that the latest improvement was broad-based, as both the overall new orders component and the export orders index rose.
“The latter rose to its highest in seven months, perhaps a reflection of US importers ramping up orders in advance of potential [Donald] Trump tariffs.”
2. Services activity eases
China’s official non-manufacturing PMI – which tracks activity in the service and construction sectors – dropped to 50 compared with 50.2 the previous month.
Within the non-manufacturing PMI, the construction sector subindex fell to 49.7 in November, compared with 50.4 in October. It is the first time that the figure has fallen below 50 since February 2020, when the early months of the coronavirus pandemic saw limits on activity.
“The recent improvement in home sales appears to have had little effect in arresting the wider drags on construction activity,” said Ng at Capital Economics.
The new order index for the construction industry stood at 43.5, indicating that stimulus measures targeting the struggling property sector had yet to make a substantial impact.


The Caixin/S&P Global services PMI, meanwhile, aligned with the official survey, falling to 51.5 in November from 52 in October.
The survey showed the new business subindex declined to 51.8 in November from 52.1 the previous month, while the expansion of new business inflows from abroad also slowed.
Firms, though, hired additional staff for a third consecutive month to manage workloads, while overall business confidence rose to its highest level in seven months.
“Market optimism improved. The indicator for future activity expectations grew for the second straight month to reach a seven-month high. Service providers generally expressed confidence in market improvement amid policy support, although some were concerned about the future trade environment,” said Wang Zhe, senior economist at Caixin Insight Group.
3. Official composite PMI unchanged, manufacturing lifts Caixin gauge
China’s official composite PMI – which tracks economic activities in the manufacturing and non-manufacturing sectors – stood at 50.8, unchanged from last month.
The Caixin/S&P Global Composite PMI, meanwhile, rose to 52.3 from 51.9, driven by faster expansion in the manufacturing sector and remaining in expansionary territory for the 13th straight month.
“Expansion accelerated in manufacturing while decelerating in the services sector. Manufacturing’s shrinking employment dragged on the labour component of the composite PMI. Prices were generally stable, although the level in the services sector was relatively weak. Market optimism improved across sectors,” added Wang at Caixin Insight Group.
4. More to be done despite accelerated recovery
Ng at Capital Economics said he expects an acceleration in quarter-on-quarter gross domestic product growth in the fourth quarter due to the rise in the composite PMI, despite the slight fall in the Caixin services PMI.
“Increased fiscal spending and the front-loading of shipments to the US should continue to support growth at least in the near-term,” he added.
The structural and cyclical pressures facing the economy are expected to continue
Wang Zhe, Caixin Insight Group
Wang at Caixin Insight Group said that while the economic downturn appeared to be bottoming out, it needed “further consolidation”.
“The consistency and effectiveness of those additional stimulus measures deserves close attention,” he added.
“The structural and cyclical pressures facing the economy are expected to continue, coupled with the likelihood of continued accumulation of external uncertainties, which requires sufficient policy buffers.
“Positive factors have increased, which contributed to an accelerated economic recovery in November.
“That said, it is worth noting that the downward pressure facing the economy remains prominent, marked by continued contraction of employment.
“This indicates that the effect of economic stimulus is yet to be felt in the labour market and businesses’ confidence in expanding their workforce needs to be strengthened.”


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Manufacturing activity in China improved in November, but services and construction activity saw slight dips


Manufacturing activity in China improved in November, but services and construction activity saw slight dips.


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Explainer | China’s economic recovery gathers pace, led by manufacturing, but risks remain

Manufacturing activity in China improved in November, but services and construction activity saw slight dips

1. Manufacturing improvement ‘broad-based’