May 10, 2021

Chinese manufacturing industry on the threshold of the contraction in November

Chinese manufacturing industry on the threshold of the contraction in November



The Chinese manufacturing industry recorded its third month followed by growth slowdown, with the purchasing manager index (PMI) at 50 points, two tenths less than in October and just at the threshold of the contraction, reported the National Statistics Office today. (ONE)

The data shows that Chinese industry continues on a downward path. A figure above the threshold of 50 points means growth and below contraction.

The growth of Chinese manufacturing has stagnated in November, which is its worst performance since the contraction registered in July 2016, month in which the PMI fell to 49.9 points.

The Chinese manufacturing industry recorded its maximum growth in the last five years last May, when the indicator reached 51.9 points.

In October, the production sub-index dropped from 52 to 51.9, while the new orders sub-index dropped from 50.8 to 50.4 in November.

The chief statistics officer of the ONE Zhao Qinghe blamed the cooling on factors such as the drop in the price of raw materials and the bad moment of international trade, with the indexes of exports and imports still in negative numbers.

"This indicates that downward pressures on short-term imports and exports have grown due to the slowdown in the recovery of global economic growth and the increase in uncertainties about trade frictions," Zhao said.

However, the ONE highlighted that non-manufacturing-related businesses performed well in November, placing their index at 53.4, which is "a reduction of 0.5 points from the previous month, indicating that the Non-manufacturing growth slows down but still continues. "

Within this sector, the services related to parcel service, telecommunications and internet expanded especially thanks to the effect of the "Day of the Singles", celebration of consumption in China that takes place every November 11th.

For its part, the services sector, which accounts for more than half of the country's GDP, stood at 52.4 points, recovering from its October fall with an advance of 0.3 points.

The British consultancy Capital Economics pointed out that the fall of the PMI reflects that "the growth continues under pressure, with signs that the recent rebound in construction is losing gas, since local governments are cutting spending".

According to the analyst of the consultant Julian Evans-Pritchard, "probably it is more fault of a domestic demand weaker than of the commercial tensions".

In fact, for the future it predicts that "growth is likely to slow down even more in the coming months, even though the meeting between (the presidents of the United States and China) Trump and Xi is going through a commercial ceasefire that avoid further expansion of tariffs. "

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