China manufacturing sector experienced an unexpected contraction in November, according to a private survey that revealed persistent weakness in the world’s second-largest economy. The RatingDog China General Manufacturing PMI, conducted by S&P Global, fell to 49.9 this month, missing Reuters poll expectations of 50.5 and dropping below the critical 50-point threshold that separates expansion from contraction. This disappointing performance marks a continued slowdown from September’s 51.2 reading and October’s 50.6 figure, highlighting ongoing challenges in domestic demand despite some recovery in export orders.
Private and Official Surveys Show Consistent Weakness
The private survey results align with official data released Sunday showing China’s factory activity shrank for an eighth consecutive month, though the official PMI of 49.2 represented a modest improvement from October’s 49.0. The divergence between the surveys reflects their different methodologies, with the private poll covering 650 manufacturers and typically focusing on export-oriented firms, while the official survey samples over 3,000 companies. Both indicators, however, point to sustained manufacturing weakness despite government efforts to stimulate economic activity.
Production Halts as New Orders Stall
Manufacturing production growth essentially halted in November as new orders nearly stalled, according to S&P Global and RatingDog’s joint statement. The survey noted that manufacturers responded by reducing their workforce and purchasing volumes while adopting more cautious inventory management strategies. Despite these domestic challenges, new export orders showed a notable recovery, expanding at their quickest pace in eight months. This export resilience provided some offset to weak domestic conditions but proved insufficient to keep overall factory activity in expansion territory.
China Manufacturing: Broader Economic Context and Policy Implications
The manufacturing contraction occurs against a backdrop of broader economic challenges, with fixed-asset investment declining 1.7% in the first ten months of the year and falling 11.4% year-on-year in October alone. Industrial output growth slowed to 4.9% in October, while retail sales expanded at just 2.9%, marking their fifth consecutive monthly slowdown. Economists now project fourth-quarter growth could decelerate below 4.5%, increasing pressure on policymakers to implement additional stimulus measures ahead of key economic planning meetings later this month.
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