China's manufacturing activity fell again in November; Japan's rises
China's manufacturing activity fell again in November while there a rise in the PMI (purchasing manager's index) in Japan, stagnation in India and a fall in South Korea.
China's official PMI, which tracks big state enterprises, fell to 49.6 in November, down from the previous month's reading of 49.8. A level below the 50-mark indicates contraction in the sector, while one above suggests growth.
In the private sector Chinese manufacturing firms signalled that output stabilised in November, thereby ending a six-month sequence of reduction. However, total new work continued to decline, and at a similarly modest rate to that seen in October, despite a pick up in new export business growth. Relatively soft overall client demand led firms to scale back their purchasing activity again in November, while inventories also declined. Deflationary pressures intensified over the month, as highlighted by sharper decreases in both input costs and output prices.
Adjusted for seasonal factors, the PMI — a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy — posted at 48.6 in November, up slightly from 48.3 in October. The health of the sector has now worsened in each of the past nine months. However, the latest deterioration was the weakest seen since June. The higher PMI reading was partly driven by a stabilisation of output volumes in November. This contrasted with reduced production in each of the prior six months.
Dr. He Fan, chief economist at Caixin Insight Group, said: “The Caixin China General Manufacturing PMI for November continued to show signs of recovery, reaching 48.6, compared to October's 48.3. This indicates that pressure on economic growth has eased and fiscal policy has had a strong effect. Overall, the economy is still on track to become more stable.”
Manufacturing conditions in Japan improved substantially in November. Both production and new orders increased at marked rates, with the former expanding at the fastest rate since March 2014. Subsequently, both employment and buying activity expanded during the month. On the price front, input prices increased at the fastest rate since July, although remained historically muted. Meanwhile, prices charged rose for the first time in three months.
The headline Nikkei Japan Manufacturing PMI posted at 52.6, up from 52.4 in October, thereby indicating a marked improvement in operating conditions at Japanese manufacturers. Moreover, the index posted the highest reading in 20 months, which mainly reflected a quicker expansion in production. Contributing to the overall improvement in manufacturing conditions was a sharp rise in production. The rate of increase was the quickest since March 2014, with 23% of surveyed companies noting higher output compared to October. According to panellists, greater demand, new product launches and extra staff led to an expansion in production. At the sector level, all three monitored sub-sectors indicated growth in output.
The health of India’s manufacturing economy improved for the twenty-fifth successive month in November, although to the least extent in this sequence. The latest PMI data showed slower increases in incoming new business and output, while subdued demand growth led firms to keep workforce numbers broadly unchanged. Meanwhile, input cost inflation accelerated to the strongest since May, whereas factory gate prices were raised at a weaker rate that was marginal overall.
Falling for the fourth consecutive survey period to a 25-month low of 50.3 in November (October: 50.7), the seasonally adjusted Nikkei India Manufacturing PMI highlighted a marginal improvement in business conditions across the sector. Subsector data highlighted consumer goods as the best performing category, while operating conditions at intermediate goods companies deteriorated for the first time since December 2013.
Manufacturing conditions in South Korea continued to deteriorate at a weak rate in November. Both production and new orders declined at soft rates that were only modest overall. In contrast, employment increased during the month for the first time since March. On the price front, both input and output prices declined sharply, with the former decreasing at the fastest rate in two-and-a-half years. The headline Nikkei South Korea Manufacturing PMI posted at 49.1 in November, the same reading as in October, thereby indicating a marginal rate of contraction in operating conditions at South Korean manufacturers. Production at South Korean goods producers declined for the ninth month in a row in November, signalling the joint-longest period of contraction since an 11-month sequence ended in February 2009.
Pic above: People wearing masks walk past the China Central Television (CCTV) headquarters in Beijing, 1 Dec, 2015. Heavy smog shrouded Beijing again on Tuesday.