Dec 02, 2019 09:45 AM

Manufacturing Activity Expands at Fastest Pace in Almost Three Years: Caixin Survey

An employee works at a textile mill in Qingdao, East China's Shandong province, on Oct. 30. Photo: IC Photo
An employee works at a textile mill in Qingdao, East China's Shandong province, on Oct. 30. Photo: IC Photo

The rate at which China’s manufacturing activity is growing rose to its highest point in nearly three years in November, driven by rising stocks of purchased items and stronger job creation, a Caixin-sponsored survey showed Monday.

The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the manufacturing sector’s operating conditions, rose further to 51.8 in November from 51.7 in the previous month. Though the rate was only marginally higher, it marks the strongest expansion since December 2016.

The Caixin PMI is one of the earliest available monthly indicators of economic conditions in China and is closely watched by investors. A number above 50 indicates expansion, while anything below 50 points to contraction. Manufacturing accounted for nearly 30% of China’s gross domestic product in the first nine months of this year, according to data (link in Chinese) from the National Bureau of Statistics (NBS).

The gauge of new export orders saw its first back-to-back monthly growth since early 2018. Coupled with rising domestic demand, total new orders rose strongly in November “with a number of firms citing firmer underlying demand conditions,” according to the survey, though the reading dipped slightly from October when the growth rate was the highest in nearly six years.

In response to the rising workload, manufacturing companies further increased production in November, although the output subindex dipped marginally from the previous month’s high, when it was the highest since December 2016.

The employment subindex rebounded back to expansionary territory in November after seven straight months of contraction. The reading marks the second expansion this year.

Companies bought more to meet the needs of higher production, with the quantity-of-purchases gauge rising to the highest since January 2018.

Manufacturing companies generally expected output to rise over the next 12 months, but the measure of future output expectations slipped to a five-month low in November.

“Business confidence remained subdued, as concerns about policies and market conditions persisted, and their willingness to replenish stocks remained limited. This is a major constraint on economic recovery, which requires continuous policy support,” said Zhong Zhengsheng, director of macroeconomic analysis with consultancy CEBM Group, a subsidiary of Caixin Insight Group.

“If trade negotiations between China and the U.S. can progress in the next phase, and business confidence can be repaired effectively, manufacturing production and investment is likely to see a solid improvement,” he said.

China’s official manufacturing PMI, released by the NBS on Saturday, picked up to 50.2 (link in Chinese) in November from 49.3 in the previous month, marking the first expansion following six straight months of contraction.

The official PMI polls a larger proportion of big companies and state-owned enterprises than the Caixin manufacturing PMI, which is sponsored by Caixin and compiled by London-based data analytics firm IHS Markit Ltd.

The Caixin China General Services Business Activity Index for November, which tracks the country’s services sector, will be released on Wednesday.

Contact reporter Tang Ziyi (

Read more about Caixin’s economic indexes.

Caixin Global has officially launched Caixin CEIC Mobile, a mobile-only version of a world-class platform for macroeconomic and microeconomic data.

From now on, all users can enjoy a one-month free trial on the Caixin App through December 2019. If you’re using our App, click here. If you haven’t downloaded the App, click here.

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