However, any reading below 50 indicates contraction in the sector. “Overall, the economy is still on track to become more stable”, said He Fan, chief economist at Caixin Insight Group.
Advertisement
The Caixin/Markit China Manufacturing Purchasing Managers’ Index(PMI) edged up to 48.6 in November, beating market expectations of 48.3, which would have been unchanged from the previous month.
The PMI survey showed that consumer goods manufacturers were doing best, with the strongest growth in export orders coming from the US, Germany, and Middle East.
Manufacturing in Asia more or less stagnated for a second successive month in November, though the steady picture represents an improvement on the steeper declines seen in prior months.
Vietnam’s manufacturing PMI dipped below the 50 level to 49.4 in November as new orders and employment fell marginally. Manufacturing conditions in the country worsened last month at the highest rate of deterioration in over three years, according to Nikkei Malaysia.
As for the services sector, whose growth has helped offset weakness in manufacturing, the official non-manufacturing PMI rose to 53.6 in November from October’s 53.1. “While EUR/USD did not have much of a reaction to the news, it is certainly not positive for the currency”, Kathy Lien, managing director of FX strategy for BK Asset Management, said in a note to clients.
However, He also noted that the prices for both the inputs and outputs of China’s factories fell in November, adding to concern about deflationary pressure on the economy.
The import sub-index also fell to 46.7 from 47.5 in October, while purchasing prices slumped to 41.1 from 44.4 over the same period. Demand continued to grow and new export orders rose at the fastest pace in more than a year.
The official government manufacturing gauge is heavily weighted toward large enterprises, while the Caixin survey taps a smaller sample size and places greater emphasis on smaller firms. Some observers expect further cuts in interest rates and bank’s reserve requirement ratio – which has been cut several times in the past year – to encourage lending to businesses.
“The deal has been sealed for the European Central Bank, markets have moved after the very strong hints and one data point wouldn’t change its mind at this stage”, said Jennifer McKeown at Capital Economics.
Advertisement
“Mirroring the trend for new orders, production increased at the softest pace in the current 25-month sequence of expansion”, it added.
