Chinese manufacturers indicate fresh improvement in sector's health

The headline seasonally-adjusted PMI rose from 49.5 in October to a three-month high of 50.7 in November, signalling a renewed improvement in manufacturing conditions.

A sustained rise in new orders helped to lift factory production for the third time in the past four months, albeit marginally. Though modest, the rate of new order growth was the best seen since June, with firms often noting that firmer market conditions had helped to lift sales.

However, new work from overseas continued to fall slightly, underscoring a relatively challenging external demand environment.

At the same time, manufacturers registered only a marginal drop in staffing levels and a slight rise in purchasing activity, as confidence around the year-ahead ticked up.

On the inflation front, average input costs rose at a modest pace that remained much slower than the series average, while selling prices were broadly unchanged.

The further increase in total new orders prompted firms to expand their production schedules in November after a slight reduction in October, S&P Global said in a release. The rate of growth was quicker than the post-pandemic trend, albeit modest overall.

In line with the trend seen for output, purchasing activity also returned to expansion in November. Input buying has now increased in three of the past four months, though the latest rise was only slight.

Concurrently, stocks of purchases fell at a weaker pace, while the upturn in production contributed to a stronger rise in inventories of finished goods.

Supply chain performance meanwhile improved slightly for the second month in a row in November.

Although employment across China's manufacturing sector continued to contract, the rate of job shedding eased in November.

The weaker reduction in staffing levels coincided with an improvement in business confidence midway through the final quarter of the year.

Optimism regarding the 12-month outlook for output picked up to the highest in November since July. Firms were often hopeful that greater customer demand at home and overseas will support growth over the coming year.

However, overall sentiment remained softer than the historical trend.

ALCHEMPro News Desk (DS)