China manufacturing activity sinks to longest decline on record
What's the story
China's factory activity has witnessed a contraction in November, marking the longest decline on record. The official manufacturing purchasing managers' index (PMI) stood at 49.2, remaining below the growth-contraction dividing line of 50 for the eighth consecutive month. This is slightly lower than Bloomberg's economists' median estimate of 49.4.
Economic slowdown
Non-manufacturing activity also contracts in November
The non-manufacturing PMI, which measures activity in construction and services, also contracted to 49.5 in November from October's 50.1. This is the first contraction for this index in nearly three years and is largely attributed to weakness in the real estate and residential services sectors. These figures provide a glimpse into China's economic performance amid global trade tensions and investment declines.
Trade difficulties
China's industrial production and exports face challenges
China's industrial production has seen its smallest growth since the beginning of the year, while exports unexpectedly fell as global demand couldn't compensate for the decline in shipments to the US. However, tensions with the US have eased after a temporary truce last month during a South Korea summit between Presidents Donald Trump and Xi Jinping.
Economic pressures
Diplomatic tensions and domestic demand impact China's economy
A recent diplomatic spat with Japan has further added to trade uncertainties, prompting China to consider economic countermeasures. Weak domestic demand is also weighing on the outlook for Chinese factories, with retail sales growth slowing for the fifth consecutive month in October, its longest streak since the COVID-19 pandemic forced nationwide shutdowns over four years ago.
Policy direction
China maintains focus on tech and manufacturing
Despite the recent economic downturn, Chinese policymakers are not rushing to introduce new stimulus measures. The country has already injected an additional CNY 1 trillion ($141 billion) in stimulus since late September. This includes unused bond quotas for provinces to boost investment and settle dues owed to companies, as well as fresh funding for policy banks to encourage investment.