30 Nov 2021, 09:31

China factory activity edges up in November as power shortage eases

   BEIJING, Nov 30, 2021 (BSS/AFP) - Manufacturing activity in China edged up
in November on the back of an easing in power shortages and a drop in some
raw material costs, official data showed Tuesday.

   The Purchasing Managers' Index (PMI) -- a key gauge of manufacturing
activity -- in the world's second-biggest economy rose to 50.1, returning
above the 50-point mark separating growth from contraction after two months.

   The latest data from the National Bureau of Statistics was also better
than a 49.7 reading expected by a Bloomberg poll of analysts.

   "A series of recent policy measures to strengthen the guarantee of energy
supplies and stabilise market prices has shown results," said NBS senior
statistician Zhao Qinghe in a statement.

   He added that a "tightness" in power supplies eased this month, allowing
manufacturing capacity to pick up, while prices of some raw materials
"dropped significantly" as well.

   With a recovery in the global economy and the approaching Christmas
season, foreign trade has also continued to improve, Zhao said.

   China's non-manufacturing PMI, however, dropped slightly to 52.3 -- down
from a 52.4 reading in October -- as the country grappled with fresh domestic
coronavirus outbreaks.

   Analysts had predicted slowing growth after the recent flare-up of cases
in late October, which spread to 21 provinces and prompted sweeping travel
restrictions and closures.

   Capital Economics said in a report Monday that the new Omicron variant of
the virus would test China's strict zero-Covid strategy, adding that if this
proved harder to contain than the Delta variant, it "would expect officials
to tighten containment measures", disrupting services further.

   One analyst suggested a cautious reading of the latest PMI data.

   "We don't think the rebound... implies a turnaround of the manufacturing
sector," Lu Ting, chief China economist at Nomura, told AFP.

   He added that factory activity is likely to drop again in December "as the
Chinese government starts restricting output in high-polluting sectors to
ensure a blue sky for the upcoming Winter Olympics".

   The Beijing Winter Olympics are scheduled to begin on February 4.

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