China: Manufacturing PMI picks up in November, non-Manufacturing PMI ticks down
The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) came in at 50.1 in November, up from October’s 49.2. Consequently, the index rose above the 50-threshold, signaling an improvement in business conditions from the previous month. The headline print largely reflected stronger production, as well as smaller declines in new orders, new exports and employment. Improved power supply was likely an important factor behind the rise in production. Moreover, input price pressures moderated sharply in the month, amid a series of government measures which saw coal prices plummet.
In contrast, the non-Manufacturing PMI fell from 52.4 in October to 52.3 in November, due to a weaker services sector on the back of domestic Covid-19 flare-ups. However, the construction subcomponent improved as the government recently loosened some of its property curbs in order to avoid a hard landing in the real estate sector.
Analysts at Nomura are downbeat regarding the near-term outlook:
“Despite a material improvement from the energy shortage, a fine-tuning of overly aggressive property curbs and a shift in Beijing’s policy stance to easing we expect China’s economy to deteriorate further and, based on our view of recent economic shocks and their respective policy responses, we expect China’s growth path in this downturn to reach its nadir in Q1 2022.”