China’s factory activity continues to contract for a second consecutive month in November, while non-manufacturing activity has also reached a new low for the year, indicating that the world’s second-largest economy may require more robust policy support.
According to data from the National Bureau of Statistics released on Thursday, the official manufacturing purchasing managers’ index fell slightly to 49.4 in November from 49.5 in October, below the median forecast of 49.7 in a Reuters poll. Additionally, the official non-manufacturing managers’ index slipped to 50.2 in November from 50.6 in October, marking the weakest reading since December 2022.
The survey results showed that over 60% of manufacturing companies reported insufficient market demand as the primary difficulty affecting the current recovery and development of the manufacturing industry. However, there were some encouraging green shoots in the sub-indexes for the manufacturing PMI, with high tech and equipment manufacturing recording expansions.
NBS also reported that business confidence is improving, with the expectation index for production and operating activities in manufacturing standing at 55.8, despite slight slips in the sub-indexes for new orders and production. In the non-manufacturing sectors, weakness in the service industries outweighed strength in construction, particularly in real estate, leasing, and business services.
While China’s third-quarter economic growth was stronger than expected, economic data has been inconsistent, highlighting the fragility of its vast economy as Beijing undertakes a deleveraging of the once-bloated real estate sector.
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