Chinese factory sector activity slows down in November

Activity at Chinese factories continued to show resilience in November but amid some potential signs of an impending slowdown.

Caixin's Chinese manufacturing sector purchasing managers' index slipped from a 27-month high of 51.2 in October to 50.9 for November, edging past forecasts for a reading of 50.8.

Julian Evans Pritchard, China economist at Capital Economics, pointed to the month-on-month increases seen in the gauges tracking new export orders, employment and prices which are contained in the same report.

Indeed, both input costs and prices charges increased at their quickest pace since early 2011, Caixin said in a statement.

Together with the results of the service sector PMI, the above suggested economic growth remained strong.

Nonetheless, the current recovery was the result of policy stimulus the effect of which was set to fade soon.

"The construction sector sub-index of the official non-manufacturing PMI has fallen during the past two months. The upshot is that while we think economic activity will continue to hold up well for a few more months, we expect a renewed slowdown before long," Evans-Pritchard pointed out.

Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, appeared to be of a similar opinion, commenting that: "the foundation of [Chinese economic] growth was not solid and investors have to remain vigilant about the risk of a downturn in coming months."