By Gina Lee
Investing.com – China’s November factory sector activity grew at the fastest pace since November 2010, as the country’s economy continues its recovery towards pre-COVID-19 levels.
Data released earlier in the day showed that the Caixin manufacturing Purchasing Managers Index (PMI) came in at 54.9, above the 50-mark indicating expansion for the seventh consecutive month. It was also above the 53.5 in forecasts prepared by Investing.com and October’s figure of 53.6.
The survey also showed that total new orders and factory output reached 10-year highs, although new export orders saw a more modest gain. It also showed a third consecutive month of Chinese factories hiring workers and at a faster pace.
“Manufacturing continued to recover, and the economy increasingly returned to normality as fallout from the domestic COVID-19 epidemic faded,” Caixin Insight Group senior economist Wang Zhe said in a note accompanying the survey release.
“Supply and demand improved at the same time. Employment recovered markedly and overseas demand kept expanding.” Input and output prices both rose, with respondents to the survey citing a sharp rise in the cost of raw materials, especially metals, Wang said.
The survey also follows data released by the National Bureau of Statistics on Monday, showing the manufacturing Purchasing Managers Index (PMI) at 52.1 and the non-manufacturing PMI at 56.4 in November.
The data demonstrates that China continues to see a strong rebound in activity from its COVID-19 lockdown earlier in the year. Strictly enforced virus containment measures, infrastructure-driven stimulus, strong exports of medical supplies, and pent-up demand have also contributed to the rebound.
E-commerce shopping promotions that took place in November, including Singles’ Day, saw strong consumer demand, bolstering small and medium-sized companies’ confidence. Other economic indicators, including trade and producer prices, hinted at a further pick up in the industrial sector.
Although the expected growth in the Chinese economy is the weakest since 1976, the 2% figure is still stronger the growth expected in other major economies.
“We expect the economic recovery in the post-epidemic era to continue for several months. At the same time, deciding how to gradually withdraw the easing policies launched during the epidemic will require careful planning as uncertainties still exist inside and outside China,” Wang said.
However, challenges on the road to recovery remain. Rising numbers of COVID-19 cases and the re-imposition of lockdowns in some of China’s trading partners could put a dent in the demand for Chinese exports.
Investors now await the Caixin services PMI, due later in the week.