China's factory activities slow, expectations unwavering

The purchasing managers' index (PMI) for China's manufacturing sector came in at 49.4 in November, down from 49.5 last month.

China's factory activities slowed in November as the foundation for economic recovery still needs to be consolidated. However, there are still bright spots and expectations for further economic expansion that remain unabated.

The purchasing managers' index (PMI) for China's manufacturing sector came in at 49.4 in November, down from 49.5 last month, data from the National Bureau of Statistics showed Thursday.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

Some manufacturing sectors entered the traditional off-season this month, while insufficient market demand also affected the November reading, the bureau's senior statistician Zhao Qinghe said.

Despite the decline, some sub-indexes continued to show positive signs.

The production sub-index registered 50.7, remaining in the expansion territory, and the new order index logged 49.4. Specifically, demands in medicine, automobile, railway, shipping, and aerospace equipment witnessed steady growth.

The sub-index for large enterprises remained in the expansion zone at 50.5 in November, staying in the expansion territory for six consecutive months.

Growth of new driving forces accelerated. The PMI of high-tech manufacturing industries returned to the expansion territory, standing at 51.2, while that of equipment manufacturing industries was at 51.6.

Enterprises anticipate manufacturing activities to pick up in the near term, with the sub-index for production and business expectations rising to 55.8 from October's 55.6 and remaining above 55 for five consecutive months.

Thursday's data also showed that the country's non-manufacturing activity maintained expansion in November, with the purchasing managers' index for the sector reaching 50.2.

The sub-index for the service sector was 49.3 in November, down from 50.1 in October, as the impact of the Mid-Autumn Festival and National Day holidays weakened, said Zhao.

The sub-index for business expectations of service industries rose to 59.3, up from 57.5 in October, showing strong confidence in enterprises in the recovery of the sector in the future.

The construction sector maintained strong growth this month, with its sub-index for business activities standing at 55, up from 53.5 in October, Zhao noted.

The sub-index measuring expectations for activities in the construction sector came in at 62.6, indicating optimism among construction enterprises.

China's composite PMI stood at 50.4 in November, signaling that overall production from manufacturing and non-manufacturing enterprises continues to expand, Zhao said.

The country is navigating economic headwinds and putting the economy on a solid footing to achieve its full-year growth target of around 5 percent. Several international organizations raised their forecasts for China's gross domestic product (GDP) growth in 2023.

China's real GDP is projected to grow by 5.2 percent in 2023, according to the Organization for Economic Co-operation and Development economic outlook released on Wednesday.

Earlier this month, an International Monetary Fund statement predicted that China's real GDP is projected to grow by 5.4 percent in 2023, saying that "the Chinese economy is on track to meet the government's 2023 growth target, reflecting a strong post-COVID recovery."

The effective policy mix will support the moderate recovery of domestic demand, while the downward pressure on external demand is still relatively large, said Wu Chaoming, vice head of Chasing International Economic Institute.

With China's special treasury bonds taking effect and projects starting one after another, China's manufacturing PMI will improve, said Xu Tianchen, senior analyst of the Economist Intelligence Unit.

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