China’s manufacturing activity rose for a second month in a row, according to a private survey, another sign of stabilization after Beijing unleashed a stimulus package to bolster the economy.
Caixin’s Purchasing Managers’ Index rose to 51.5 last month, the highest reading since June, Caixin and S&P Global said in a statement on Monday. The expansion was much larger than the 50.6 forecast by economists and accelerated from 50.3 in October.
The findings showed that Chinese exports continued to fuel an uneven $18 trillion economic recovery, even as US President-elect Donald Trump threatened to impose tariffs that could destroy trade between the countries. Official measures activity in November showed a small increase in the manufacturing sector, while a measure of construction and services unexpectedly fell to the 50 mark, which separates contraction from expansion.
“The frontloading could continue to support manufacturing activity for several months until tariffs materialize, which could happen quite quickly given the mechanism in place in the U.S.,” said Michelle Lam, China economist at Societe Generale SA.
Stockpiling by customers helped new orders rise in November at the fastest pace since last February, when product price inflation hit a 13-month high, according to a Caixin survey. But employment continued to decline for the third month in a row, suggesting that the effects of the stimulus have yet to trickle down to the labor market.
“Although the economic downturn appears to be bottoming out, it needs further consolidation,” Wang Zhe, senior economist at Caixin Insight Group, said in a statement accompanying the release. “The structural and cyclical pressures facing the economy are expected to persist.”
The PMI for Asia, excluding China and Japan, was little changed in October, while a gauge of export orders improved the most since May, another sign of initial bootstrapping in the region ahead of Trump’s promised tariffs.
In China, domestic demand has benefited from Beijing’s subsidies to buy household appliances, cars and equipment in trade-in programthough economists say more policy support is needed to maintain growth momentum.
“These plans simply stimulate demand, while real estate transactions are unlikely to improve significantly unless the outlook for jobs, incomes and inflation improves,” said Kelvin Lam, China economist at Pantheon Macroeconomics.
Caixin’s results were largely stronger than last year’s official survey results as exports remained strong. The two studies cover different sample sizes, locations and business types, with the private survey focusing on small and export-oriented firms.
Export data released last month showed shipments in the first three quarters soared to the second-highest on record in a boom that put China on track for a record trade surplus that could reach nearly 1 trillion dollars this year.
In late September, China cut interest rates sharply and announced measures to strengthen the housing market. That prompted some analysts to raise their growth forecasts for China in 2024, bringing the average growth forecast this year to 4.8%, according to estimates compiled by Bloomberg.
