China manufacturing expands in November as constraints ease

BEIJING (BLOOMBERG) – China’s factory activity improved in November as the impact of a power crunch subsided and more working days in the month helped to boost output.

The official manufacturing purchasing managers index (PMI) rose to 50.1, the first time in three months it exceed the 50 mark that signals an expansion in production. The non-manufacturing gauge, which measures activity in the construction and services sectors, fell slightly to 52.3.

Economists had expected the manufacturing PMI to reach 49.7 and the non-manufacturing gauge to drop to 51.5, according to the median estimate in a Bloomberg survey.

November usually sees a seasonal rebound as there are more working days compared to October when China closes for a week-long national holiday. Energy shortages, which ravaged factory production in September and October, also eased during the month as coal producers boosted output and inventories rose.

However, the economy continues to be undermined by a housing market crisis and frequent Covid-19 outbreaks. Several economists expect China’s economic growth to slow to under 5 per cent next year, with more fiscal and monetary support likely to follow.

Policy makers are trying to moderate the sharp downturn in the property market, while providing targeted support to areas such as small businesses and green technology. More clues on policy action will likely come next month, when the Communist Party holds its Central Economic Work Conference.

A set of early indicators showed China’s economy continued to slow in November with car and homes sales dropping again as the housing market crisis dragged on. Strong export demand ahead of the year-end holiday season partly helped offset the property slump.

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