PMI data signalled a further modest improvement in the health of China’s manufacturing sector during November. New business rose strongly, which underpinned a further solid increase in production. Notably, new export orders saw the first back-to-back monthly rise for over a year-and-a-half. Staffing levels were broadly stable following a seven-month sequence of decline, but capacity pressures persisted, with backlogs of work expanding again. Average input costs meanwhile rose marginally, while factory gate charges fell slightly amid reports of a general drop in market prices.
Despite further increases in output and new orders, the level of positive sentiment towards the 12-month outlook for production slipped to a five-month low in November. Stricter environmental policies and market uncertainty were key factors weighing on confidence.
The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – edged up from 51.7 in October to 51.8 in November, to signal an improvement in overall operating conditions for the fourth successive month. Though modest, the pace of improvement was the strongest since December 2016.
The latest upturn in the health of the sector was partly supported by a further rise in new business placed with Chinese manufacturers.
Despite easing from October, the rate of new order growth remained solid overall, with a number of firms citing firmer underlying demand conditions. Demand from overseas also improved, with export sales picking up for the second month in a row. Though only marginal, it marked the first back-to-back increase in new orders from abroad since early 2018.
Better than I expected but sustainability is the quesrion.