China'S Manufacturing PMI Rose Slightly To 49.4 And Employment Index Fell To The Lowest

The impact of health events and tightening of prevention and control measures is still continuing. In November, the prosperity of China's manufacturing industry continued to be in the contraction range, with a slightly narrowed decline.

The Caixin Manufacturing Purchasing Manager Index (PMI) for November, released on December 1, recorded 49.4, up 0.2 percentage points from October, continuing the contraction trend since August, indicating that the production and operation situation of the manufacturing industry is still weak.

This trend is not consistent with the Bureau of statistics manufacturing PMI. In November, the National Bureau of statistics released a manufacturing PMI of 48.0, down 1.2 percentage points, a new low since May.

From the sub data, under the influence of health events, the manufacturing production index in November weakened under the line of prosperity and drought. Although the index of new orders picked up slightly, it still fell in the contraction range, indicating the weak supply and demand of manufacturing industry. Among them, new orders for consumer goods and intermediate goods increased slightly, while new orders for investment goods contracted sharply. At the same time, due to the global economic slowdown and domestic transportation difficulties under the health event, the index of new export orders was lower than the critical point for the fourth consecutive month, and the decline was larger.

Driven by the rising prices of some raw materials such as metals and oil, the purchasing price index of the manufacturing industry rose in the expansion range for the second consecutive month in November, the highest since July, with the cost of investment products rising the fastest. Under the background of weak demand, enterprises have to give up profits to promote sales. Although the ex factory price index of the month has increased, it is still below the critical point.

The employment situation deteriorated further, with the employment index in November falling to the lowest level since March 2020. The interviewed enterprises reported that health events were the main reason for the employment contraction, and the prevention and control measures led to the failure of workers to return to their posts. At the same time, production was limited, which also weakened the employment demand of enterprises. The survey shows that, among the three categories of products, the labor quantity of investment products decreased most significantly in that month.

In October, both the purchasing volume index and the purchasing inventory index briefly rose above the boom and bust line. However, due to the downturn in sales and the decline in production demand, the purchasing activities of manufacturers weakened, and the two indexes fell again to the contraction range in November. The production, inventory and transportation of manufacturing industry were affected by health event prevention and control measures, which led to the lowest supplier supply time index in November in the contraction range since June.

On the basis of the strengthening of entrepreneurs' confidence in October, the production and operation expectation index of the manufacturing industry continued to rise in November, but it was still lower than the long-term average. Companies expecting to increase production said that as health events subsided, production capacity and customer demand would gradually recover; In addition, new product release and new market development are also factors supporting the expected recovery.

Wang Zhe, senior economist of Caixin, said that since October, health events have spread in many provinces and cities, and the impact on the economy has become more and more obvious. How to balance the prevention and control of health events and economic development has become the core issue again. A few days ago, the central government has made important arrangements and put forward clear requirements for measures to further optimize the prevention and control work. How to implement the requirements and deployment of the central government has become a top priority. Under the triple pressures of demand contraction, supply shock and weakening expectations, the employment index has been at a low level for a long time, and the employment downturn and triple pressure have formed negative feedback. Therefore, the market has an urgent demand for policies to promote employment and stabilize domestic demand. At the policy level, we should strengthen the coordination of fiscal policy and monetary policy, expand domestic demand and improve the level of low-income groups.