BEIJING (Reuters) – China’s factory employment grew slowly for a second straight month in November, an official survey showed on Saturday, adding to a series of recent data suggesting the blitz of stimulus is finally catching on in the world’s second-largest economy.
The National Bureau of Statistics Purchasing managers’ index (PMI) on Saturday rose to 50.3 – a seven-month high – from 50.1 in October, above the 50 mark that separates growth from contraction and beating the median forecast of 50.2 in a Reuters poll. .
The state of China’s manufacturing sector has been depressed for months due to falling prices and shrinking orders, but two months of positive PMI readings suggest stimulus announcements are improving sentiment on factory floors.
That said, fresh wind from further US tariffs could threaten China’s industrial sector next year and pour cold water on any early optimism for Asia’s largest manufacturing sector.
While there have been signs that recent moves by Chinese policymakers could shore up an ailing commodity market, weighed down by domestic demand, officials are now racing to reduce economic risks ahead of Trump’s second term.
US President-elect Donald Trump said on Monday he would impose a 10% tariff on Chinese goods in order for Beijing to do more to stop the smuggling of Chinese-made chemicals used in the production of fentanyl.
He also threatened tariffs of up to 60% on Chinese goods while on the campaign trail, a move that poses a major threat to the growth of the world’s largest exporter of goods.
China’s exports rose more than expected in October, which analysts said was caused by industries rushing to export to major markets in anticipation of further tariffs from the US and the European Union.
The PMI report showed the number of new orders expanded for the first time in seven months in November, while new export orders contracted for the seventh month in a row.
The non-manufacturing PMI, which includes construction and services, fell to 50.0 this month, after rising to 50.2 in October.
Earlier this month, China launched a 10 trillion yuan ($1.38 trillion) debt package to ease the strain on municipal finances. That followed China’s central bank in September unveiling its biggest stimulus since the pandemic to push the economy back towards the government’s target of around 5% growth.
Chinese policy advisers recommend that Beijing should maintain that same growth target next year and introduce more stimulus to bolster domestic demand.
There are early signs that the economy is turning around.
Retail sales, a measure of consumer spending, rose the most since February last month, and the decline in property sales slowed, perhaps indicating that the troubled sector is slowing.
But industrial production last month slowed significantly from September’s pace and industrial profits, a key indicator, continued to decline, pointing to how difficult it is for firms to remain profitable in China’s current economic climate.
The Caixin factory survey of the private sector will be released on Monday and analysts expect the reading to reach 50.5.
