International | Dec 01 2009
By Rudi Filapek-Vandyck
China’s manufacturing industry continues to enjoy solid momentum with two separate surveys indicating overall conditions throughout the sector in November remained at multi-month record highs.
HSBC’s China Purchasing Managers’ Index (formerly known as CLSA’s PMI) rose to a record high of 55.7 in November from 55.4 in October, while the PMI released by the China Federation of Logistics and Purchasing (CFLP) -often referred to as the “official” purchasing managers’ index- remained unchanged from October’s 18-month high of 55.2.
It is the eighth month in a row the HSBC index has been above the watershed of 50 that divides expansion and contraction. For the official index the tally has now risen to nine months above 50.
HSBC’s new export orders sub-index rose in November to 57.5, the highest level since March 2005, from 55.6 in October. HSBC reported that those manufacturers that reported an increase in new export business “widely attributed this to stronger external demand, largely reflecting an improvement in global economic conditions”.
Overall new orders rose for the eighth month in a row, while overall output accelerated, with staffing levels rising at the second-fastest rate in the survey’s history, mainly reflecting further gains in new business.
HSBC added pre-production inventories fell slightly, while suppliers’ delivery times continued to lengthen.
Also, average input prices rose sharply in November, led by brass, chemicals, coal, petroleum and steel. However, strong competitive pressures meant that firms were unable to fully pass on the cost increases, so output prices rose at a much slower rate.
Purchasing activity rose at the third-fastest rate in the history of the HSBC survey, putting further pressure on suppliers’ capacity, with average lead times lengthening for the fourth month in a row.
According to the China Federation of Logistics and Purchasing’s survey, China’s manufacturing sector expanded for the ninth consecutive month in November but ran into headwinds from weaker trade and employment.
According to Zhang Liqun, a researcher at the State Council’s Development Research Center who comments on the PMI for the federation, the fact that the PMI remained at a record level in November indicates “the economic outlook has started to stabilise after reaching a high level and the recovery will become more steady”.
The official survey indicated sub-indexes for new export orders, imports, employment and quantities of purchases fell in November from October, while the input prices sub-index jumped to 63.4 from 56.9.
The November PMI reading compared with a record low of 38.8 plumbed in November 2008 in the depths of the global financial crisis.
[Published with acknowledgement to international news wires]