China factory activity shrinks again in November - Caixin

Activity in China’s manufacturing sector shrank again in November, according to data released on Thursday.

The Caixin manufacturing purchasing managers’ index rose to 49.4 from 49.2 in October. This was ahead of consensus expectations of 48.9 but below the 50.0 that mark that separates contraction from expansion for the fourth month in a row.

The sub-index for employment printed at the lowest level since March 2020, while the input price sub-index has been above 50 for the last two months amid high crude oil and metals prices.

Pantheon Macroeconomics noted that the headline PMI has been hovering in the 48 to 49 range for the past four months as China struggled with renewed Covid surges.

"China is gradually shifting away from zero-Covid policy, but largely leaving it to local governments to figure out the magic recipe of targeted policies that will curb Covid outbreaks while minimising economic disruptions," it said.

"One saving grace of the new approach is that so far supply chain disruptions have been much less impactful than during the Q2 lockdown, as indicated in the supper delivery time PMI at 46.7 in November versus 37.2 in April.

"The recent policy to promote vaccinations among the elderly will take time to implement. Meanwhile, China’s economy will be bumpy as regions experiment with a lighter-touch policy, and then switch to temporary strict measures to rein in soaring growth in case numbers."