MNI: China Nov Caixin Mfg PMI Softens to Lowest In 5 Months

--One-Year Business Outlook Falls to Joint-Lowest Since Index Began in April

2012

     BEIJING (MNI) - Activity in China's manufacturing sector saw "marginal"

improvement in November, but at a slower pace than in October, as output and new

order growth rose "only modestly," according to the latest Caixin Manufacturing

Purchasing Managers' Index (PMI) released Friday.

     The headline manufacturing PMI registered 50.8, the weakest level in five

months, falling from 51.0 in October. The index remained above the 50 break-even

mark for the fifth consecutive month, according to data compiled by IHS Markit

for Caixin magazine. 

     Readings above 50 indicate expansion in the manufacturing sector while

readings below 50 indicate contraction. The higher the PMI reading above 50, the

faster the expansion in the sector. The lower the reading below 50, the faster

the contraction.

     The performance shown by the Caixin index -- which focuses on smaller and

medium-size companies -- was somewhat at odds with the official manufacturing

PMI jointly released on Thursday by the China Federation of Logistics and

Purchasing and the National Bureau of Statistics. The CFLP/NBS PMI rose to 51.8

in November from 51.6 in October, beating estimates. 

     The one-year business outlook declined for the third month in a row,

falling to the joint-weakest level since the series began in April 2012.  

     Output picked up from October, but at a modest pace, Caixin said.

     Total new orders rose also slightly in November. "Nonetheless, data

indicated that client demand was relatively subdued across both the domestic and

external markets, as new export sales also rose modestly," Caixin noted.

     Input prices continued their sharp increase in November, although the index

moderated slightly from October, which was the highest since early 2011. 

     As a result, manufacturers raised their output prices further to protect

margins. 

     Companies continued to take a relatively cautious approach to employment.

"Though modest, the rate of job shedding was the fastest seen in three months,"

Caixin said. The index has indicated manufacturing job losses every month since

November 2013. 

     Unfinished business increased further in November. Backlogs of work

remained marked, although they rose at a slower rate than in October. 

     Survey participants said they expanded buying activity at a moderate pace

during November due to the slight pickup of output. 

     The average time taken for input delivery lengthened further due to

logistics problems and stricter environmental policies, but the pace of increase

was the lowest in four months. 

     "The manufacturing sector remained stable in November, although some signs

of weakness emerged," said Zhong Zhengsheng, director of Macroeconomic Analysis

at CEBM Group, a research subsidiary of Caixin. "In the fourth quarter, the

economy is likely to maintain the stability observed since the start of the

second half of the year. Economic growth in 2017 is expected to be higher than

last year, but it may come under downward pressure in 2018."

     The Caixin Manufacturing PMI is based on data compiled from monthly replies

to questionnaires sent to purchasing executives at more than 500 manufacturing

companies.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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