China said on Monday that manufacturing activity expanded for the ninth straight month in November as the world’s second-largest economy continues to recover from a slump caused by the coronavirus pandemic.
The official manufacturing Purchasing Managers’ Index (PMI) for November came in at 52.1, according to the National Bureau of Statistics. That’s the highest reading in more than three years, as well as better than the 51.5 forecast by analysts in a Reuters poll and October’s official reading of 51.4.
PMI readings above 50 indicate expansion, while those below that signal contraction. PMI readings are sequential and show month-on-month expansion or contraction.
The November data showed that the recovery in China’s vast manufacturing sector has accelerated, according to CNBC’s translation of the statistics bureau’s Mandarin-language statement.
Four factors drove manufacturing activity in November, according to Zhao Qinghe, the bureau’s senior statistician.
- Both supply and demand of Chinese manufactured goods have continued to improve;
- Imports and exports have also steadily recovered;
- Prices of both raw materials and output have risen;
- Prospects of manufacturers of all sizes have improved.
China also released PMI data for the services sector, which similarly showed that activity expanded for the ninth straight month. The official non-manufacturing PMI reading for November was 56.4, compared with 56.2 in October, data by the statistics bureau showed.
Overall, China said its composite PMI for this month came in at 55.7 — inching up from October’s 55.3.
‘Steady and stable recovery’
Analysts said the latest set of economic indicators point to a pick up in China’s economic growth.
“When we look at the data front in China, it’s been showing steady and stable recovery,” Jackson Wong, asset management director at Amber Hill Capital, told CNBC’s “Street Signs Asia” on Monday after the release of the official PMI data.
Wong said the Asian economic giant is expected to continue on the same path into next year, and could be the only major economy to register growth this year.
Julian Evans-Pritchard, senior China economist at consultancy Capital Economics, pointed out that the most “significant development” in China recently is a recovery in household spending. That’s likely to continue given a tightening labor market and improving consumer sentiment, he explained.
“That should further support the rebound in services activity. It should also boost manufacturing, which will continue to benefit too from supportive fiscal policy and strong foreign demand,” he wrote in a note following the official PMI data release.
China, where cases of Covid-19 were first detected, is among the few economies expected to continue growing this year — but at a much slow pace. The International Monetary Fund has forecast the Chinese economy to expand by 1.9% in 2020, slowing from the 6.1% last year.