China factory activity shrinks for second straight month

HONG KONG

An official survey of Chinese manufacturers shows that factory activity contracted for a second straight month in November, an indicator of weak demand despite various stimulus measures aimed at supporting the economy.

The official manufacturing purchasing managers’ index fell to 49.4 in November, down slightly from October’s 49.5, according to data released yesterday by the National Bureau of Statistics.

A figure below 50 indicates a contraction in manufacturing activity.

The index has fallen in seven of the past eight months, with an increase only in September. Despite prolonged weakness after the pandemic, the economy is expected to grow at about a 5 percent annual pace this year.

The new orders sub-index contracted for a second consecutive month, while two other sub-indices for raw material inventory and employment also were lower.

China’s recovery from the COVID-19 pandemic has faltered after an initial burst of growth earlier in the year faded more quickly than expected. Despite prolonged weakness in consumer spending and exports, the economy is expected to grow at about a 5 percent annual pace this year.

Capital Economics’ Sheana Yue and Julian Evans-Pritchard wrote in a note that the latest surveys may be “overstating the extent of slowdown due to sentiment effects.”

“That turned out to be the case in October, with the hard data not quite as weak as the PMIs had suggested,” they wrote.

In recent months, the government has raised spending on construction of ports and other infrastructure, cut interest rates and eased curbs on home-buying.