China’s official activity survey for November indicates a continued slowdown in its economy. Manufacturing contracted for a second consecutive month, while non-manufacturing activity reached a new yearly low. The official manufacturing purchasing managers’ activity index unexpectedly dropped to 49.4 in November from 49.5 in October, the lowest reading since June. This was slightly worse than the market’s median forecast of 49.7, marking the second consecutive month below forecast.
The official non-manufacturing managers’ index also slipped to 50.2 in November from 50.6 in October, raising concerns as China’s services sector is the largest area of economic activity, with activity approaching contraction levels (below 50).
Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, noted, “Survey results show that more than 60% of manufacturing companies reported insufficient market demand, which remains the primary challenge for the industry’s recovery and development.”
The overall activity index decreased to 50.4 from 50.7, well below the forecast of 51.7%. This weaker reading reflects China’s struggle to maintain its post-pandemic recovery, with challenges including a deepening property crisis, deflationary risks, and weaker demand for Chinese exports in the EU, parts of Asia, and the US.
Despite Beijing’s recent support measures, such as boosting bond sales for infrastructure investment and easing investment restrictions in property, the economy faces mounting external headwinds and continues to grapple with economic difficulties.