China says manufacturing exercise will broaden for the ninth yr in a row because the official PMI beats expectations
Workers making dolls at a factory in Lianyungang, China's Jiangsu Province.
Stringer | AFP | Getty Images
China said on Monday that manufacturing activity expanded for the ninth consecutive year in November as the world's second largest economy continues to recover from a slump caused by the coronavirus pandemic.
The official purchasing managers' index for manufacturing (PMI) for November was 52.1, according to the National Bureau of Statistics. This is the highest value in more than three years and better than the value of 51.5 forecast by analysts in a Reuters poll and the official value of 51.4 in October.
PMI values above 50 indicate expansion, while those below this value indicate contraction. The PMI values are sequential and show a monthly expansion or contraction.
November data showed the recovery in China's huge manufacturing sector accelerated, as CNBC translated the statistics bureau's Mandarin statement.
According to Zhao Qinghe, the bureau's chief statistician, four factors drove manufacturing activity in November.
Both supply and demand for Chinese industrial goods have continued to improve, imports and exports have steadily recovered, raw material prices and production have risen, and the prospects for manufacturers of all sizes have improved.
China also released PMI data for the services sector, which also showed activity increased for the ninth straight year. The official non-manufacturing PMI for November was 56.4, compared to 56.2 in October, data from the Bureau of Statistics showed.
Overall, China said its composite PMI for that month was 55.7 – up from 55.3 in October.
"Steady and stable recovery"
According to analysts, the latest economic indicators point to an upturn in Chinese economic growth.
"If we look at the data front in China, the recovery is steady and stable," said Jackson Wong, asset management director at Amber Hill Capital, on Monday after the official PMI data was released to CNBC's Street Signs Asia.
Wong said the Asian economic giant is expected to stay on the same path for the next year and could be the only major economy to see growth this year.
Julian Evans-Pritchard, a senior Chinese economist with the consulting firm Capital Economics, said the "most significant development" in China recently has been a rebound in household spending. With a tightening labor market and improving consumer sentiment, this is likely to continue, he said.
"This should continue to support the recovery in services activities. It should also boost manufacturing, which will continue to benefit from supportive fiscal policies and strong external demand," he wrote in a note following the official release of the PMI data.
China, where cases of Covid-19 were first discovered, is one of the few economies that is expected to continue growing this year – albeit at a very slow pace. The International Monetary Fund has forecast that the Chinese economy will grow 1.9% in 2020, compared to 6.1% last year.