Left Menu
Development News Edition

UPDATE 1-China November factory activity unexpectedly returns to growth

Reuters | Beijing | Updated: 30-11-2019 07:41 IST | Created: 30-11-2019 07:38 IST
UPDATE 1-China November factory activity unexpectedly returns to growth
Image Credit: Pixabay

Factory activity in China unexpectedly returned to growth in November for the first time in seven months, as domestic demand picked up on Beijing's accelerated stimulus measures to steady growth. But gains were still slight, and export demand remained sluggish. More U.S. tariffs are looming within weeks and Beijing and Washington are still haggling over a first phase trade deal.

With China's economic growth cooling to near 30-year lows and industrial profits shrinking, speculation is mounting that Beijing needs to roll out stimulus more quickly and more aggressively, even if it risks adding to a pile of debt. The Purchasing Managers' Index (PMI) bounced back to 50.2 in November, its highest since March, China's National Bureau of Statistics (NBS) said on Saturday, above the 50-point mark that separates growth from contraction on a monthly basis.

The result compared with 49.3 in October. A Reuters poll showed analysts expected the November PMI to come in at 49.5, rising just marginally from the previous month.

The official factory gauge pointed to an improvement in China's vast manufacturing sector last month. Total new orders bounced back to expansionary territory with the sub-index rising to 51.3, the highest level seen since April. That indicates domestic consumption firmed up after Beijing repeatedly urged local governments to kick stimulus up a gear to meet economic goals before year-end.

Beijing has front-loaded 1 trillion yuan ($142 billion) of a 2020 local government special bonds quota to this year and has urged that they be issued and used as early as possible, a sign that some analysts believe suggests the government is worried about downward pressure on the economy. Factory output also rose to 52.6 in November, the strongest pace since March.

But uncertainties in the U.S.-China trade conflict clouded the outlook for external demand. New export orders fell for an 18th straight month in November, albeit at a slower pace, with the sub-index rising to 48.8 from 47.0 in October. U.S. President Donald Trump said this week that the world's largest economies are close to reaching agreement on the first phase of a trade deal. But trade experts and people close to the White House said it could slide into the new year, given China is pressing for more extensive tariff rollbacks.

The next U.S. tariff deadline is Dec. 15, when it is scheduled to slap a 15% levy on about $156 billion of Chinese products. The PMI survey also indicated factories continued to cut jobs in November despite slightly improved business confidence. The employment sub-index was at 47.3, unchanged from that in October.

Beijing's drive to guide more bank lending towards small private firms appeared to be working. Their PMI index recorded the strongest gain in November, compared to medium-sized and large firms, but their performance was still the poorest of the three at 49.4. SERVICE SECTOR GROWTH

Growth in China's services sector activity also quickened in November. The official services PMI picked up to 54.4, recovering from October's 52.8, the lowest point since February 2016, a separate NBS survey showed.

A strong services sector has offered Beijing some cushioning effects as manufacturers face growing difficulties in securing demand both at home and abroad. However, the sector's resilience weakened late last year amid a broader economic slowdown.

China's gross domestic product growth is expected to slow to a near three-decade low of 6.2% in 2019 and then hit 5.9% in 2020, according to a Reuters poll. ($1 = 7.0389 Chinese yuan renminbi)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


TRENDING

OPINION / BLOG / INTERVIEW

China: A savior for emerging markets or a poison pill?

... ...

Future of Urban Planning: Artificial Intelligence guiding the way

Advances in emerging technologies like Artificial Intelligence and Machine Learning can help us understand our cities better and derive useful insights from real-time data collected through automated models....

Videos

Latest News

Tennis-Victoria govt confirms new COVID-19 case in Australian Open quarantine

The Victoria state government on Friday confirmed one new case of COVID-19 in the group of people in quarantine in Melbourne ahead of the Australian Open, a few hours after Spanish player Paula Badosa said she had tested positive for the vi...

Bitcoin extends slide, sheds 5% in Asia

Bitcoin fell to an almost three-week low on Friday as profit taking and worries about extra regulation drive the cryptocurrency toward a weekly loss of more than 15.Bitcoin fell nearly 5 to 29,300 early in the Asia session, its lowest since...

Elon Musk to offer $100 mln prize for 'best' carbon capture tech

Tesla Inc chief and billionaire entrepreneur Elon Musk on Thursday took to Twitter to promise a 100 million prize for development of the best technology to capture carbon dioxide emissions. Capturing planet-warming emissions is becoming a c...

PRESS DIGEST-Financial Times - Jan 22

The following are the top stories in the Financial Times. Reuters has not verified these stories and does not vouch for their accuracy. Headlines- Airbus to raise production more slowly as pandemic bites httpson.ft.com3o5ZJe6 - Intel says h...

Give Feedback