The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped to 49.9 in November from 50.6 in October, missing analysts’ expectations of 50.5 in a Reuters poll. The 50-mark separates growth from contraction.
An official PMI survey on Sunday showed factory activity shrank for an eighth straight month.
“On the demand side, although new export orders picked up in November, this trend failed to reverse the sluggish state of the manufacturing sector,” said Yao Yu, founder of RatingDog.
With China and the U.S. agreeing to a trade truce in October, new export orders expanded at the quickest pace in eight months amid reports of successful business development efforts, the RatingDog survey showed.
However, export charges declined fractionally, amid intense competition for goods producers. Official data last week showed industrial profits contracted in October, after double-digit growth in the previous two months as businesses grappled with lacklustre domestic demand. Softening new orders at home led to renewed job shedding and the first contraction in purchasing since June.
As a result of lower purchases and improved communication with suppliers, lead times shortened in November.
Due to slower replenishment of input products, stocks of purchases fell for the first time in seven months and at the quickest pace since December 2023. Goods producers were reluctant to hold additional inventory due to softening demand growth.
Stocks of finished goods also depleted at the quickest pace in nearly three years.
Manufacturers said higher metal prices hiked input costs. But businesses opted to absorb the muted rise in costs and further offered discounts, which resulted in a reduction in output charges.
Firms were generally positive about sales and output in the next 12 months, with the level of optimism improving from October. They hope supportive government policies, business expansion and new product launches would help spur growth in the year ahead.
Economists expect China’s exports to start rising again but say the continued drag from the property sector and a fading fiscal tailwind reinforced calls for more policy support. Meanwhile, investors are eyeing policy signals from the Central Economic Work Conference in December.
