Chinese PMI indicates global growth

Chinese manufacturing has risen across the sector in November.

In data released by the Caixin Insight Group and IHS Markit, the aggregate purchasing managers’ index rose at the fastest pace since December 2016. The figure rose from 51.7 in October to 51.8 in November.

Other indicators also improved in November, with overseas sales rising for the second month in a row, the first consecutive monthly increase in new orders since early 2018.

These upticks in production led to a stable figure for employment, which had been falling in previous months. However, most improved was buying activity by Chinese manufacturers, which rose at its strongest since 2018.

The positive news comes after a slower month for Australian manufacturing, and if the Chinese figures indicate an increase in global manufacturing activity, Australian firms could also benefit.

Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a member of Caixin Insight Group, highlighted the positivity in the figures.

“China’s manufacturing sector continued to recover in November, with both domestic and overseas demand rising and the employment subindex returning to expansionary territory for the second time this year,” said Zhong.

One factor holding back the Chinese manufacturing sector, according to Zhong, was the lack of investment and uncertainty.

“Business confidence remained subdued, as concerns about policies and market conditions persisted, and their willingness to replenish stocks remained limited. This is a major constraint on economic recovery, which requires continuous policy support,” said Zhong.

For further improvement, Zhong pointed to the resolution of US-China trade disputes.

One example of the renewed activity was a joint announcement between BMW Group and Great Wall Motors to build a plant for the manufacturing of electric vehicles for the Mini and Great Wall brands.

The plant aims to produce 160,000 vehicles a year, with a workforce of 3,000, and total investment of 650 Euros.

With China driving the market for electric vehicles, the plant hopes to cater to local and international demand, said Nicolas Peter, board member of BMW AG.

“This joint venture will enable us to produce a larger number of MINI-brand-fully electric vehicles at attractive conditions for the world market. This is also an important strategic step for the MINI brand. The joint venture with Great Wall underlines the enormous importance of the Chinese market for us.”