A rival report of PMI Services in November was released Thursday morning as well. The report describes new orders as “robust” and “accelerating” and the best since July, which is good news for the USA economy where manufacturing, which is directly exposed to the global economy, has been weak.
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“The important thing to remember is that it is still at a level consistent with GDP growth of more than 2.5%”, said Steve Murphy, US economist at Capital Economics.
But, he pointed out, manufacturing only represents about 12% of the USA economy and less than 10% of total employment, and the much more important services sector “has continued to do very well”.
Services, which have helped offset the weakness in manufacturing, showed some improvement.
The latest data highlight the two-speed nature of China’s economy as officials try to shift the economy’s focus from manufacturing to services in a transition that’s proving to be rocky. In the energy sector, some survey participants noted that a decline in oil prices has begun to impact energy production across the market. Five industries posted growth: Printing & Related Support Activities; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Transportation Equipment. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars). Hard economic conditions and weak demand reportedly hit confidence. Both gauges were the weakest since August 2012.
The survey members blamed fierce competition and frail economic conditions for the slowdown in growth of new work.
On Tuesday, China’s official services survey showed on growth in the sector improved with the non-manufacturing PMI up half an index point to 53.6. The New Orders Index registered 57.5 percent, 4.5 percentage points lower than the reading of 62 percent in October. Yet, these data continue to show that the manufacturing sector remains mired in troubled times in light of global headwinds. As a result, output prices at the composite level fell at a solid pace that was the steepest seen in 20 months. The Employment Index decreased 4.2 percentage points to 55 percent from the October reading of 59.2 percent and indicates growth for the 21st consecutive month.
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A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
