On December 1st, according to the latest data released by S&P Global in conjunction with RatingDog, the Purchasing Managers’ Index (PMI) for China’s manufacturing sector in November shifted from expansion to contraction, dropping by 0.7 percentage points from October’s 50.6 to 49.9, below the market expectation of 50.5 and marking a four-month low.
The report from RatingDog indicated that manufacturing production, after three consecutive months of expansion, stalled in November. Looking at the sub-indices, both production and demand showed a trend of slowing expansion in November, approaching a standstill.
On the demand side, despite a slight increase in new export orders, it was not enough to change the sluggish state of manufacturing. The expansion momentum of new orders almost came to a halt.
On the production side, due to the overall slowdown in new order growth, various production-related sub-indices decreased month-on-month. Manufacturers reduced employment and procurement levels, becoming more cautious in inventory management.
Purchasing levels fell into contraction, marking the first decline in procurement since June. Businesses mentioned that with the slowdown in new business growth, they correspondingly reduced procurement of production materials. With reduced procurement and improved communication with suppliers, the supplier delivery time shortened in November. Employee index re-entered the contraction zone due to the impact of slowing new order growth.
In terms of inventory, both raw material inventory and finished goods inventory showed a contracting trend, with readings at relatively low levels in nearly three years. The level of raw material inventory marked its first decline in seven months.
Regarding prices, the differentiation pattern of “rising raw material prices and falling finished product prices” persisted, keeping enterprise profit margins under continual pressure.
Yao Yu, the founder of RatingDog, stated that in November, the PMI for Chinese manufacturing shifted from expansion to contraction. Overall, the revival of new export orders did not support the continued expansion of the manufacturing sector across all sub-indices.
On the day prior (November 30th), data released by China’s National Bureau of Statistics showed that the mainland manufacturing PMI rose by 0.2 to 49.2 in November, lower than the expected 49.4 and continuing to remain in contraction territory for eight consecutive months.