China's manufacturing activity expanded in November for the ninth time, suggesting recovery from the coronavirus pandemic.
The official manufacturing Purchasing Managers’ Index (PMI) for November recorded 52.1, according to the National Bureau of Statistics. That is considered the highest reading in more than three years.
PMI readings above 50 suggest expansion, while those below that indicate contraction. PMI readings are sequential and suggest month-on-month expansion or contraction.
The November data indicated that the recovery in China’s manufacturing activity has accelerated, based on CNBC’s translation of the statistics bureau’s Mandarin-language statement.
The factors that fueled manufacturing activity in November, according to Zhao Qinghe, the bureau’s senior statistician are the improvement of supply and demand of Chinese manufactured goods, recovery of imports and exports, increased prices of both raw materials and output, and improvement of prospects of manufacturers of all sizes.
China also issued PMI data for the services sector, which suggested that activity expanded for the ninth straight month. The official non-manufacturing PMI reading for November posted 56.4, compared with 56.2 in October, data by the statistics bureau suggested.
Overall, China reported its composite PMI for this month came in at 55.7. Analysts claimed that the latest set of economic indicators signify an improvement in China’s economic growth.
“When we look at the data front in China, it’s been showing steady and stable recovery,” Jackson Wong, asset management director at Amber Hill Capital, told CNBC’s “Street Signs Asia” on Monday after the release of the official PMI data.
Wong noted the world's second-largest economy is expected to tread on the same path into next year and could be the only economy to manifest growth this year.
Julian Evans-Pritchard, a senior China economist at consultancy Capital Economics, explained that the most “significant development” in China is a recovery in household spending. That is predicted to continue due to a tightening labor market and improving consumer sentiment.
“That should further support the rebound in services activity. It should also boost manufacturing, which will continue to benefit too from supportive fiscal policy and strong foreign demand,” he wrote in a note following the official PMI data release.
China's industrial output
China’s industrial output reported a 6.9% increase in October, according to data from the National Statistics Bureau.
Analysts polled by Reuters had predicted a 6.5% rise. China’s industrial output increased at a faster-than-expected pace in October. Retail sales remained on the path of recovery albeit at a slower-than-forecast pace as China attempts to above the Covid-19 slump.
Meanwhile, retail sales in China increased by 4.3% on-year, missing analysts’ predictions for 4.9% growth but faster than a 3.3% increase in September.
China’s auto industry posted a 12.5% increase in October vehicle sales, a growth attributed to the increasing demand for electric cars and trucks.
China is the “real game” in terms of business for Southeast Asia, according to Karim Raslan, founder of KRA Group.
Raslan explained that Southeast Asia is China’s largest trading group, after exceeding both the U.S. and the European Union in 2020.
“The recovery itself is actually two-pronged, and you see the larger cities, you see the coastal regions doing much, much better than the rest of the country,” he said during an interview on CNBC.
“So, there’s really two recoveries going on — Beijing wants to advertise the Beijing, Shanghai, Guangdong type of recovery, but that’s not most of China,” he stressed.
