China’s Nov factory activity likely contracted for second month: Reuters poll
2023.11.29 01:38
© Reuters. FILE PHOTO: Robotic arms assemble cars in the production line for Leapmotor’s electric vehicles at a factory in Jinhua, Zhejiang province, China, April 26, 2023. China Daily via REUTERS/File Photo
By Joe Cash
BEIJING (Reuters) – China’s manufacturing activity likely contracted for a second consecutive month in November, a Reuters poll showed on Wednesday, keeping alive calls for further stimulus measures as factory owners struggle for orders both at home and abroad.
While the official purchasing managers’ index (PMI) is expected to have improved to 49.7 in November from last month’s unexpected drop to 49.5, the median forecast of 31 economists in a Reuters poll has the index staying below the 50-point level demarcating contraction from expansion.
Economists appear in agreement that the economy is still largely struggling for traction despite some signs of green shoots in mixed October data, with all respondents returning readings between 49.0 and 50.2 and the vast majority predicting a small contraction of between 49.6 and 49.8.
The world’s second-largest economy has been unable to mount a strong post-COVID recovery this year as a deep crisis in the property market, local government debt risks, slow global growth and geopolitical tensions dented momentum.
A flurry of policy support measures has had only a modest effect, raising pressure on authorities to roll out more stimulus.
Profit growth at China’s industrial firms shrank back to the low single digits last month, following an 11.9% increase in September and a 17.2% gain in August, which analysts attributed to volatile input costs. Both new export and import orders shrank in October.
The sputtering recovery has prompted many analysts to warn that China may begin flirting with Japan-style stagnation later this decade unless policymakers take steps to reorientate the economy towards household consumption and market-allocation of resources.
China’s central bank governor said on Tuesday he was “confident that China will enjoy healthy and sustainable growth in 2024 and beyond,” but urged structural reforms to reduce reliance on infrastructure and property for growth.
Policy advisers say the government will need to implement further stimulus should it wish to sustain an annual economic growth target of ‘around 5%’ next year, which would match this year’s goal.
The official PMI will be released on Thursday. The private Caixin factory survey will be issued on Friday, and analysts expect its reading to edge up to 49.8 from 49.5 in October.
