Chinese manufacturing production continued to expand at a robust pace in November,
despite the rate of growth easing since October’s five-and-a-half year peak. At the same time,
companies reported a softer expansion of total new orders, while new export work was
broadly stable after a slight fall in October.Meanwhile, cost-cutting initiatives underpinned a further fall in staff numbers, though the rate of job shedding was the slowest seen in a year-and-a-half. November also saw a sharp pick up in inflationary pressures, with both input costs and prices charged rising at the fastest rates since early-2011.
At 50.9 in November, the seasonally adjusted Purchasing Managers’ Index™ (PMI™) fell from a 27-month high of 51.2 in October, to signal a marginal improvement in overall operating conditions. Nonetheless, the health of the sector has now strengthened in each of the past three months,
which marks the longest period of improvement since late-2014.
Chinese manufacturers noted a further rise in production volumes during November, stretching the current sequence of expansion to five months. Though solid overall, the rate of output growth softened since October. Companies that raised production generally commented on
greater intakes of new work. However, in line with the trend for output, the rate of new order book expansion weakened since the previous month and was moderate overall.A number of panellists suggested that stronger domestic demand was behind the latest rise in new
business. Furthermore, new export work was broadly unchanged in November, after a slight decline in the previous survey period.Firms continued to increase their purchasing activity in November, with the rate of growth edging up to a four-month high. However, the use of inputs in the production process led to a marginal drop in inventories of purchased items for the second month in a row. In contrast, stocks of finished items rose slightly in November, which some firms attributed to increased output.
A lack of stock at suppliers contributed to a further lengthening of delivery times. That said, the rate at which vendor performance deteriorated was only marginal.
November signalled a further decline in Chinese manufacturing employment, as a number of companies sought to reduce their costs. That said, the rate of job shedding was the weakest seen in 18 months. Nonetheless, a combination of lower staff numbers and increased new work led to a further rise in outstanding business.
Inflationary pressures intensified over the month, with Chinese manufacturers signalling the sharpest increase in cost burdens since March 2011 during November. Anecdotal evidence suggested that higher prices for raw materials, particularly for items such as metals, had raised
overall input costs. In order to help protect their margins, firms generally raised their prices charged, and to the greatest extent since February 2011.
Month: December 2016
JAPAN MANUFACTURING PMI SUSTAINED AT 51.3
Operating conditions at Japanese manufacturers improved further mid-way through the final quarter of 2016. Production increased at a slightly slower pace, albeit one that remained stronger than the long-run series average. This was driven by new order growth, which picked up to a ten-month high. Consequently, buying activity picked up slightly. In contrast, employment growth eased to the weakest in three months. Meanwhile, on the price front, input prices and charges remained broadly unchanged from October.
The headline PMI posted at 51.3 in November, little-changed from October’s 51.4 (the highest reading since January), thereby signalling a solid improvement in manufacturing conditions in Japan. Furthermore, the latest reading was higher than the long-run series average.
Production at Japanese manufacturers rose for the fourth month running during November. Although slowing from October’s ten-month record, the rate of expansion was quicker than the average observed this year so far. According to anecdotal evidence, the opening of new business facilities, new product launches and a rise in international demand helped to boost output. At the sector level, both intermediate and investment goods producers noted production growth.
Total new orders also increased in November. In fact, the rate of expansion was the most marked since January. Similar to production, panellists mentioned greater demand resulting from new product launches as well as improved advertising as factors behind the rise in incoming sales.
Greater foreign demand also contributed to the expansion in total sales, with new export orders increasing for the third successive month. The rate of growth eased, but was nevertheless stronger than the historical average. Firms mentioned the securing of trade partners and greater sales to Taiwan.
Reflecting improved conditions, manufacturers increased their buying activity in November. However, the rate of expansion was only slight overall.
Finally, input prices broadly stabilised, following a ten month sequence of decline. Selling prices also remained broadly unchanged from October.
