China factory activity edges up in November

China’s factory activity grew at its fastest pace in over three years in November, official data showed, as the world’s second-largest economy continued its recovery from the coronavirus.

The Purchasing Managers’ Index (PMI), a key gauge of manufacturing activity in China, has largely rebounded following strict measures to curb the virus early in the year, coming in at 52.1 points this month.

This was higher than October’s reading of 51.4 points, and remains above the 50-point mark separating growth from contraction.

The latest figures also bring the PMI data back to levels seen in September 2017. Analysts said improvement in both domestic and external demand boosted manufacturing activity.

“The main driver was a rise in new orders particular, the export orders component picked up,” said Julian Evans-Pritchard, senior China economist of Capital Economics.

“This suggests that China’s exports continue to benefit from strong foreign demand for Chinese made goods beyond Covid-19 related products, although fresh lockdowns abroad might have boosted demand for shipments of the latter”, Pritchard added.

Zhao Qinghe, senior statistician at the National Bureau of Statistics, which publishes the PMI, said both the production and new orders indexes edged up.

Recovery

Both sub-indexes fared well in industries relating to high-tech manufacturing such as pharmaceuticals, electrical machinery and equipment, he added.

However, recovery in the manufacturing industry remains rough, Zhao said. Official data showed that small enterprises, which were hurt more by the outbreak, continued to lag behind large businesses.

China is expected to be the only major economy to record positive growth this year.

The non-manufacturing PMI came in at 56.4 points in November, slightly higher than the month before, signalling further recovery in the services sector.

Lu Ting, chief China economist at investment bank Nomura, said that China’s domestic recovery was on track thanks to its Covid-19 containment, although “an extended pandemic may eventually dampen demand for China’s exports if the purchasing power in overseas economies diminishes”.

While there were sporadic virus outbreaks in Shanghai, Tianjin and Inner Mongolia, which Lu earlier said could slow recovery in service industries, the impact appears limited for now. – Nampa/AFP