China’s November Economic Data Signals Continued Contraction, Raises Need for Policy Support

(CTN News) – China’s non-manufacturing activity reached a new annual low in November, while manufacturing activity fell for a second consecutive month. This suggests that the world’s second-largest economy is still struggling and might need stronger government assistance.

In an unexpected decline from 49.5 in October to 49.4 in November, the official manufacturing purchasing managers’ index dropped marginally, according to data issued Thursday by the National Bureau of Statistics.

Declining PMI figures suggest China may require more robust policy support to navigate economic uncertainties.

A Reuters poll predicted 49.7 as the median, which was marginally worse. Similarly, last month’s official manufacturing PMI from China was lower than expected.

Relative to October, the official non-manufacturing managers’ index fell to 50.2 from 50.6, as reported in the same NBS bulletin. Since December 2022, this reading has been the lowest.

A PMI value below 50 suggests contraction, whereas a reading above 50 indicates expansion.

Sixty percent or more of manufacturing firms said there wasn’t enough demand in the market. According to Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, the current recovery and expansion of the manufacturing industry are being hindered by insufficient market demand.

Despite a drop in three of the five manufacturing PMI sub-indices from October to November, the index did show some promising signs of improvement. The production of both high-tech items and equipment both saw growth.

Despite a little decline in the sub-indexes for new orders and production, NBS found that business confidence is on the rise, with the anticipation index for manufacturing standing at 55.8.

Among the non-manufacturing sectors, construction was strong while the service industries were weak. Industries like real estate, leasing, and business services had their business activity index remain below 50, indicating that they will continue to contract.

Data on China’s economy has been inconsistent and patchy, even though the country’s third-quarter growth was better than anticipated. This shows how fragile China’s enormous economy is as Beijing works to deleverage its once-bloated real estate sector.