China’s factory activity shrinks again in November, services activity cools
The manufacturing purchasing managers’ index (PMI) rose to 49.2 in November from 49.0 in October, falling below the 50-point mark that separates growth from contraction, according to a survey by the National Bureau of Statistics on Sunday. This was in line with analysts’ forecast of 49.2 in a Reuters poll.
The new orders and new export orders sub-indices improved compared to October but were still below 50.
The data reflects the difficulties manufacturers are experiencing in sustaining the post-Covid-19 recovery; Added to this is the trade war with the US, which increases the pressure on businesses.
Non-manufacturing PMI, which includes services and construction, contracted for the first time since December 2022, falling to 49.5 from 50.1 in October.
In particular, the services PMI fell below 50 for the first time since September 2024 and recorded the lowest level since December 2023, as the increase from the October holidays faded in November, according to NBS. For decades, China’s policymakers have had two reliable tools to boost growth: revving up its giant industrial machine to boost exports when household spending softens, or unleashing state-backed infrastructure projects to boost momentum. But with a global slowdown, a protracted property crisis and local governments straining under their debts, authorities are struggling to restart activities and there is a renewed focus on the need for economic reform.
Growth in the world’s second-largest economy slowed to its weakest pace in a year in the third quarter, underlining its vulnerability to the impact of slowing external demand.
Policymakers recognize that reforms are needed to correct long-standing supply-demand imbalances, increase household spending and address heavy local government debt that prevents many provinces, some with economies the size of countries, from standing on their own feet.
Even so, they recognize that such structural changes would be painful and carry political risks at a time when US President Donald Trump’s trade war is putting additional pressure on the economy.
China unveiled a new plan to boost consumption on Wednesday, focusing on improving consumer goods in rural areas and sectors such as “pets, anime and fashionable toys.”
Analysts surveyed by Reuters predict that the private sector RatingDog PMI will be at 50.5, down slightly from 50.6 a month ago.
