China's manufacturing declines in Nov as COVID curbs continue to constrain output: Caixin PMI

December 01,2022

The headline seasonally adjusted Caixin China Purchasing Managers' Index (PMI) - a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy - rose from 49.2 in October to 49.4 in November, to signal a deterioration in the health of the manufacturing sector for the fourth month in a row. The rate of decline, however, was the slowest seen since August and only slight.

Ongoing COVID -19 containment measures continued to weigh on the performance of China's manufacturing sector during November. Firms registered a further fall in output, with the rate of contraction picking up slightly from October, amid a sustained reduction in sales. That said, the latest drop in new work was the weakest recorded in four months.

Pandemic restrictions and reduced production requirements also led firms to cut back on purchasing activity and contributed to a further drop in staff numbers. At the same time, there was a notable deterioration in supplier performance, which declined at the fastest rate since May.

Looking ahead, optimism around the 12-month outlook for production remained subdued in the context of historical data, but improved to a three-month high. Prices data meanwhile signalled a slight acceleration in the rate of input cost inflation, while output charges fell fractionally.

Commenting on the China General Manufacturing PMI data, Dr. Wang Zhe, Senior Economist at Caixin Insight Group said: “The Caixin China General Manufacturing PMI in November rose 0.2 points from the previous month to 49.4, remaining in contractionary territory for the fourth consecutive month, as Covid-19 outbreaks curtailed manufacturing activity in many parts of China.”

Overall, the pandemic continued to take a toll on the economy. Output contracted, total demand was under pressure, overseas demand remained weak, employment deteriorated, logistics was sluggish, and manufacturers faced growing operating pressure.

The market is in urgent need of policies to promote employment and stabilize domestic demand. Beijing should further coordinate fiscal and monetary policies to expand domestic demand and boost incomes of the poorer parts of the population, Zhe added.

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