China's Manufacturing Stalls In November: ETFs In Focus

China’s manufacturing activity stalled in November. The Manufacturing Purchasing Managers Index (PMI) fell to 50.0 from 50.2 in October. This was the weakest reading since July 2016. Anything above the 50 point level indicates that activity levels are improving while a reading below it shows signs of deterioration.

China’s National Bureau of Statistics (NBS) claimed that the fall in the index was due to slower improvement at large manufacturers and a sharp decline in activities of the small sectors. Activity levels in the mid-sized firms also stalled a bit but at a slower pace than in October.

NBS reported that new orders, input prices and supplier delivery time rose at a slower pace than in October. Selling prices fell for the first time in eight months and firms exercised layoff measures for the third consecutive month. Inventory levels and order backlogs also fell at a faster pace than the previous month.

The Chinese economy has been slowing down due to several factors including its multi-year campaign to curb corporate debt and risky borrowing practices. In a statement accompanying the data release, NBS confirmed that country’s import and export orders are indicating growing downward pressure owing to trade friction. Indicators measuring the demand for imports and exports were stuck in the contractionary phase for the fifth successive month.

NBS’s non-manufacturing PMI also fell to 53.4 from 53.9 in October, its weakest improvement since August 2017. The non-manufacturing sector in China accounts for a significant chunk of the total economic output. Therefore, this index’s reading could hold much more importance than manufacturing PMI.

However, the recent meeting between President Trump and Xi at G-20 summit in Argentina came as a ray of hope. In Argentina, President Trump and Xi Jinping agreed to a 90-day truce according to which the Trump administration will not be hiking tariffs to 25% from 10% on $200 billion worth of Chinese goods for another 90 days. The rates were supposed to be hiked on Jan 1, 2019.

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Gary Anderson 3 months ago Contributor's comment

This was before Meng. Add her situation to slowing in the USA and in China and the Fed blinking, and problems mount.