An important gauge of economic activity in China dropped back into contraction territory in November after a brief rally in October, with demand remaining weak despite an easing of supply-side pressures.
The Caixin China General Manufacturing Purchasing Managers’ Index for November, a private gauge of monthly sector activity, came in at 49.9 for the month, just below the 50-point threshold that separates contraction from expansion.
Yesterday, the country’s official PMI, released by the National Bureau of Statistics, came in at 50.1. The official PMI puts greater emphasis on the activity of larger, state-run companies and is generally more optimistic than the Caixin gauge.
Like the official PMI, the Caixin figures showed that an easing of power shortages, which hit the economy in October, provided a slight boost to output, which rose for the first time in four months. Inflationary pressure also eased “markedly”, with the slowest rate of price increases in more than a year, Caixin said.
But the increase in output was offset by a decline in new orders. Manufacturers also cut their staff numbers for the fourth time in as many months.
“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,” said Wang Zhe, senior economist at Caixin Insight Group.
“Policymakers should still focus on supporting small and midsize enterprises. They should also pay attention to problems including deteriorating employment, limited growth of household income and weak purchasing power for consumer goods.”