Falling for the fourth consecutive survey period to a 25-month low of 50.3 in November (October: 50.7), the seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ IndexTM (PMI)TM – a composite single-figure indicator of manufacturing performance – highlighted a marginal improvement in business conditions across the sector. Any reading below 50 indicates a worsening of business conditions compared to the prior month. China’s GDP growth dipped below 7 percent in the last quarter for the first time since 2009. While ongoing expansion in the sector signalled by today’s figure is to be welcomed, the positive trend isn’t broad based across industry and isn’t supporting sufficient confidence to prompt a return of employment growth. New business was reported mainly from clients based in the USA, Germany, Sweden, Turkey, the Middle East, Japan, China and other Asia-Pacific nations.
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Markit’s surveys have painted a brighter picture of British manufacturing than official data, which has shown the sector stagnant or contracting since the start of the year.
While growth was slower than in October it remained ahead of long-term averages. Output charges were reduced for the third successive month, as companies maintained their competitiveness by passing on (in part) the decrease in costs.
The dollar index, which tracks the greenback against a basket of six major rival currencies, was steady at 100.22, within sight of its more than 12-year high of 100.39 hit in March.
The factory report also showed that United Kingdom price pressures remain contained.
“Deflationary pressures are rising”, said Qu Hongbin, chief China economist and co-head of Asian economic research at HSBC Holdings Plc in Hong Kong.
They noted that China’s industrial profits fell sharply, by 4.6 percent year-on-year in October. 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.
Some see the slowdown in China’s manufacturing activity as an inevitable step in the economy’s transition.
“The health of the [manufacturing] sector has now worsened in each of the past nine months”, Caixin said in a joint statement with Markit, a financial information services provider that compiled the PMI survey.
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Dobson added that growth among manufacturers remains focused on consumer sectors, rather than the exports the government is keen to promote; and is concentrated in larger firms.
