Caixin China Composite PMI™ data (which covers both manufacturing and services) indicated that business activity in China increased for the first time in four months in November. That said, the rate of expansion was only marginal, as signalled by the Caixin Composite Output Index posting 50.5 in November, up from 49.9 in October.
The renewed increase in overall Chinese business activity was supported by a further rise in service sector activity in November. That said, the pace of expansion eased since October and was only modest. This was signalled by the Caixin China General Services Business Activity Index posting at 51.2 in November, down from October’s three-month high of 52.0. Meanwhile, manufacturing production stabilised in November, following a six-month sequence of reduction.
After a solid expansion in October, total new work placed at Chinese service providers rose only slightly in November. According to panellists, relatively weak market conditions had softened client demand in the latest survey period. Furthermore, September 2015 excepted, the latest increase in new work was the slowest seen in 16 months. In contrast, manufacturing firms saw a further decline in new business during November. Though modest, the decrease in new order volumes at manufacturers offset the increase at service providers, and led to a slight fall in composite new business.
Employment at Chinese service providers continued to increase in November. However, the rate of job creation eased to a marginal pace that was the second-weakest for a year-and-a-half (after August 2015). Anecdotal evidence suggested that relatively subdued business conditions had contributed to softer payroll growth. Goods producers continued to cut their workforce numbers in November, albeit at the weakest rate in six months. Overall, staffing levels declined for the sixth successive month at the composite level, though the rate of job shedding was only slight.
Outstanding business continued to fall across the Chinese service sector in November, as companies commented on a general lack of pressure on operating capacity and increased efficiency. The rate of depletion quickened slightly from October to a modest pace. Backlogs of work meanwhile rose again at manufacturing companies and at a moderate pace. Consequently, the level of work-in-hand (but not yet completed) was little-changed at the composite level.
Increased competition for new work led services companies to reduce their selling prices for the third month in a row in November. That said, the rate of discounting was only slight. Manufacturers also cut their charges in November and at a sharp rate. As a result, output prices at the composite level fell at a solid pace that was the steepest seen in 20 months.
Service sector optimism towards the 12-month business outlook improved only slightly from October’s record low, as a number of companies expressed concerns over a challenging economic outlook.