Weak Manufacturing Demand Amid Trade War Leads to Layoffs: Caixin Survey
Growth in China’s manufacturing activity improved marginally in November, while muted demand amid the country’s trade war with the U.S. led to further layoffs, a Caixin survey showed Monday.
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives a snapshot of operating conditions in the manufacturing sector, inched up to 50.2 in November, little changed from October’s 50.1 and just off a 16-month low of 50 in September.
The Caixin index, one of the first available monthly indicators showing China’s latest economic conditions, is closely watched by investors. A reading of 50 separates expansion from contraction. The higher above 50 the faster the expansion, while the further below 50 the greater the contraction.
“Overall, domestic demand across the manufacturing sector improved in November, while overseas demand was still subdued,” said Zhong Zhengsheng, director of macroeconomic analysis with consultancy CEBM Group, a subsidiary of Caixin Insight Group. “China’s economy was weak, but did not show significant signs of deterioration.”
“Relatively muted client demand and efforts to lower costs contributed to a further reduction in staff numbers,” the survey said.
Of the five subindexes that make up the PMI, the one for new orders continued to rise marginally in November, pointing to slightly improved demand, according to the survey. This “may be due to a recent raft of government policies aiming to support the private sector,” Zhong said.
Amid a combination of relatively subdued sales and restrictions on factory production that governments have imposed for environmental protection, the output subindex dropped to 50, marking its lowest level since June 2016.
The gauges for output charges and input costs both dropped significantly. This was in line with the weakening domestic commodities market, Zhong said, adding that upward pressure on prices for industrial products eased somewhat. Notably, the prices that companies charged customers fell for the first time in 18 months as companies tried to attract new business.
Headwinds from the ongoing trade war with the U.S. continued to take a toll on new export orders, which contracted for the eighth straight month in November.
In a piece of good news on that front, China and the U.S. reached a temporary deal on the sidelines of the G-20 summit in Argentina over the weekend. The U.S. agreed that in January it will leave punitive tariffs on $200 billion worth of Chinese goods at 10%, and not raise the levy to a 25% it had previously threatened, according to a White House statement. China agreed to purchase a substantial amount of agricultural, energy, industrial and other products from the U.S. to reduce their trade imbalance, the statement said.
Since July, the U.S. has imposed additional tariffs on $250 billion worth of Chinese imports, with 10% tariffs on $200 billion and 25% on the remainder. Beijing has retaliated with new levies on $110 billion of imported U.S. goods. Overall, each side has imposed charges on half of its annual imports from the other.
Manufacturing accounts for 30% of China’s gross domestic product. The official manufacturing PMI, released by the National Bureau of Statistics on Friday, dipped to 50 in November from 50.2 in the month before.
Contact reporter Lin Jinbing (email@example.com) and Liu Jiefei (firstname.lastname@example.org)
Read more about Caixin’s economic indexes.
- 1China-Developed C919 Jet to Cost Twice the Expected Price, Filing Shows
- 2China Says It Will ‘Strictly Restrict’ People From Entering or Leaving the Country
- 3Cover Story: China’s Race to Provide for Its Aging Population
- 4Weekend Long Read: The Free Market Isn’t to Blame for Shanghai’s Lockdown Woes
- 5Update: Shanghai Lays Out Plan to End Lockdown and Reopen Business by June
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas