China Manufacturing Activity Recovers In November

China’s factory activity rebounded in November as sustained rise in new orders lifted production, survey results from S&P Global showed on Friday.

The Caixin manufacturing Purchasing Managers’ Index, or PMI, rose to a three-month high of 50.7 in November from 49.5 in October.

Economists had forecast the index to rise moderately to 49.8.

The health of the sector strengthened for the third time in the past four months. A score above 50.0 indicates expansion.

The official PMI survey data released on Thursday showed that the manufacturing sector contracted for the second straight month in November. The factory PMI dropped to 49.4 from 49.5 in the previous month.

There was a sustained and quicker increase in new business received by manufacturers, S&P Global said. However, orders from overseas continued to fall slightly.

Producers expanded their production schedules driven by higher demand. Purchasing activity returned to expansion in November, in line with the trend in output.

Input buying rose in three of the past four months and stocks of purchases declined at a weaker pace.

Meanwhile, supply chain performances improved for the second consecutive month.

The rate of job shedding slowed in November and the rate of payroll cuts was the slowest in the three-month sequence of falling headcounts.

Business optimism regarding the twelve-month outlook for output improved to the highest since July. Yet overall optimism remained softer than the historical trend.

“Considering that economic growth in the third quarter slightly exceeded expectations and the base number for fourth-quarter year-on-year growth is low, achieving the target of around 5 percent for the whole year looks attainable,” Caixin Insight Group Senior Economist Wang Zhe said.

“Ultimately, policies should aim to lay a solid foundation for long-term economic growth and cultivate long-lasting market confidence,” Wang added.

The International Monetary Fund has forecast China’s economy to expand 5.4 percent this year before slowing to 4.6 percent next year.

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