The Chinese manufacturing sector has hit a 10-year high, a private sector survey showed on Tuesday, as the economy continued to rebound from the Covid-19 pandemic.
The seasonally-adjusted Caixin China General Manufacturing Purchasing Managers’ Index came in at 54.9 in November. The sharpest improvement in conditions since November 2010, it compared to 53.6 a month previously, and also beat consensus, for a slight easing to 53.5.
Both output and new orders were at decade-highs, with a “sustained and strong” upturn in client-demand leading to the fastest increase in employment since May 2011.
The Caixin survey, compiled by IHS Markit, echoed official data released on Monday by China’s National Bureau of Statistics. It reported a PMI of 51.4 for November, the highest reading since September 2017.
Wang Zhe, senior economist at Caixin Insight Group, said: “The manufacturing PMI has now signalled an improvement in conditions for seven months in a row as the post-epidemic economic recovery continued to pick up speed.“We expect the recovery to continue for several months. At the same time, deciding how to gradually withdraw the easing policies launched during the epidemic will require careful planning, as uncertainties still exist inside and outside China.”
Michael Hewson, chief market analyst at CMC Markets, said: “The latest Caixin manufacturing PMI survey saw the index hit a ten-year high, confirming a similar pattern in the official numbers, along with a strong services component, something that is currently lacking in Europe and the US due to a second wave of coronavirus infections – something that China has been much more successful in managing to avoid.”
Miguel Chanco, chief Asia economist at Pantheon Macroeconomics, said: “Overall, an upside surprise was more likely than not, following yesterday’s stronger-than-expected official manufacturing PMI for November. Chinese factories don’t look to be deterred, yet, by the increased Covid-19 headwinds in developed markets, with the new export orders sub-index rising and remaining in the black for a fourth consecutive month.
“Going forward, the more gradual acceleration in M1 growth, which leads by about nine months, suggests that the rapid momentum in manufacturing is severely exposed to the downside. As such, the only slow loosening of liquid conditions suggest that any payback next year is likely to be sharp.”
