China's factory activity declines for second month
China’s manufacturing sector continued to falter in November, official data showed on Thursday, despite government support.
The manufacturing purchasing managers’ index, released by the National Bureau of Statistics, fell to 49.4 from 49.5 in October, below forecasts for 49.8 and the lowest reading since July.
A reading above 50 indicates growth, while one below suggests contraction.
Non-manufacturing PMI was 50.2, down on October’s 50.6. While still in positive territory, it was the lowest reading since December, when Beijing abruptly lifted its stringent zero Covid controls and cases spiked.
It was also below forecasts for 50.9.
China’s economy, the world’s second largest, has struggled to regain its footing since the pandemic. It has been hit by the slump in the once red-hot property sector, stringent Covid controls and weaker demand both domestically and globally after they were lifted.
The lacklustre PMIs come despite a number of support measures announced by Beijing to boost economic growth.
Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics, said: "The divergence between falling demand, at home and abroad, and rising output is continuing.
"The December Central Economic Work Conference is likely to priorities rebalancing and high-quality growth over sheer growth, with the target growth rate probably remaining unchanged, at ‘about 5%’.
"Policymakers are determined to reduce the reliance of the economy on the residential property sector, while boosting the size of advanced manufacturing.
"China probably will rely on fiscal stimulus, mainly via fixed asset investment, to stabilise growth. Don’t expect a major consumption stimulus, given policymakers’ wariness about encouraging welfarism and laziness."
Lee Hardman, senior currency economist at MUFG Bank, said: "The consensus forecast for GDP growth in China this year have risen over the past month, from around 5.0% to 5.2%. The PMI surveys though have signalled that the pick-up in growth could already be petering out.
"The unexpected loss of growth momentum will keep pressure on policymakers to provide more stimulus to support growth."