Recently, the National Bureau of Statistics released data showing that in November, the manufacturing purchasing managers' index was 50.3%, up 0.2 percentage points from the previous month, rebounding for three consecutive months, and the pace of manufacturing expansion accelerated slightly.

The non-manufacturing business activity index was 50.0 percent, down 0.2 percentage points from the previous month, and the composite PMI output index was 50.8 percent, the same as the previous month.

What information points do the November PMI data reflect? Jingtai interprets it for you.

Interpretation 1: Both ends of supply and demand have rebounded significantly

In November, China's manufacturing purchasing managers' index (PMI) was 50.3%, which was in the expansion range for two consecutive months. Among them, the production index, new orders index and supplier delivery time index were all higher than the critical point, at 52.4%, 50.8% and 50.2%, respectively.

The policy effect is emerging

Since November, the steady growth effect of the stock policy and a series of incremental policies has been further revealed, driving the continuous rebound of the manufacturing industry. In particular, the new orders index reached 50.8%, a sharp increase of 0.8 percentage points from the previous month, which was the first time in nearly seven months that it rose to the expansion range, and contributed the most to the improvement of the overall manufacturing PMI.

Improvement on the demand side

From the demand side, new orders and new export orders increased by 0.8 percentage points respectively from the previous month, indicating that after the introduction of a series of support policies, the short-term demand prospects for the manufacturing industry are promising. Specifically:

• Automobile sales: The 150 billion yuan of ultra-long-term special treasury bonds arranged in July to support the trade-in of durable consumer goods stimulated the rapid growth of automobile sales.

• Property market transaction volume: The tax reduction policy for real estate transactions such as deed tax implemented in late November has driven the property market transaction volume in first- and second-tier cities to soar again.

• Infrastructure construction: The 100 billion yuan central budget investment plan and the 100 billion yuan "double" construction project list issued in advance during the year required the physical workload to be formed by the end of the year, which promoted the upward trend of the infrastructure construction data in the month.

• Exports: High-frequency data shows that exports continue to remain strong in the near future.

Supply-side improvements

On the supply side, the production index expanded by 0.4 percentage points to 52.4 percent, and the expectation of business and production activities also rose to 54.7 percent, up sharply by 0.7 percentage points this month. This indicates that the confidence of enterprises in production and operation has increased.

Raw material prices have fallen

However, the purchase price of raw materials fell to 49.8% in November, a sharp drop of 3.6 percentage points from the previous month, which is related to the decline in crude oil and BDI (International Baltic Sea Integrated Freight) prices this month, indicating that the producer price index (PPI) of industrial products still has some downward pressure in the short term.

Interpretation 2: The non-manufacturing business activity index remained at a critical point

In November, China's non-manufacturing business activity index was 50.0%, down 0.2 percentage points from the previous month, at a critical point. By industry, the business activity index of the construction industry was 49.7%, down 0.7 percentage points from the previous month, and entered the contraction range for the first time since March 2020, while the business activity index of the service industry was 50.1%, unchanged from the previous month.

Construction activity slowed

Despite the recent recovery in the property market, real estate investment activity remained subdued, causing the construction business activity index to fall back to 49.7% in November. Specifically, the business activity index of the housing construction and building decoration and installation industries is less than 50%. However, although the business activity index of the civil engineering and construction industry decreased from the previous month, it still remained at a high level of more than 52%, indicating that infrastructure construction-related activities are still in a rapid expansion trend. This coincides with the recent acceleration in infrastructure investment. With the 200 billion yuan investment quota issued in the fourth quarter of this year ahead of schedule and the formation of physical workload, it is expected that the growth rate of infrastructure investment will further accelerate, becoming an important factor to promote the rebound of economic growth in the fourth quarter.

Affected by factors such as the cold weather and the gradual off-season of outdoor construction, the production activities of the construction industry have slowed down. However, from the perspective of market expectations, the business activity expectation index was 55.6%, an increase of 0.4 percentage points from the previous month, indicating that the construction enterprises' expectations for the recent industry development remained generally stable.

The outlook for the manufacturing sector is positive

Looking ahead to December, the probability of further expansion of the manufacturing industry in the short term is relatively high. Domestic real estate sales have performed well in recent times, and the issuance of government bonds and local government bonds has accelerated, all of which will drive the improvement in consumer demand in the manufacturing sector. In addition, the regulatory authorities continue to make efforts to support the "two high" (high-tech industries and high-end manufacturing) and "two new" (new infrastructure construction and new urbanization) industries, and the production of general equipment and high-tech manufactured products is expected to continue to grow rapidly. It indicates that manufacturing investment will also maintain a rapid growth rate at the end of the year, and the overall economic fundamentals can be expected to continue to improve.

Interpretation 3: The vitality of economic development continues to improve

Market supply and demand are stable and accelerate growth

In November, the effect of the stock policy and the incremental policy continued to appear, driving the market supply and demand to run better. On the demand side, the new orders index was 50.8%, up 0.8 percentage points from the previous month, rising for three consecutive months, indicating that market demand continued to improve and showed an accelerated upward trend. On the supply side, driven by the improvement of market demand and various policies, the production willingness of enterprises has further increased, and the production index was 52.4%, an increase of 0.4 percentage points from the previous month, not only rising for three consecutive months, but also running in the expansion range for three consecutive months, indicating that the production activities of the manufacturing industry have continued to grow steadily and steadily since September.

The manufacturing of new drivers and consumer goods rose rapidly

In November, the stock policy and the package of incremental policies had a particularly prominent effect on the new kinetic energy and consumer goods manufacturing industry. The equipment manufacturing PMI was 51.3%, the same as the previous month, but the production index was close to 54%, up 0.8 percentage points from the previous month, and the new orders index was also stable at more than 52%. The high-tech manufacturing PMI was 51.2%, up 1.1 percentage points from the previous month, of which the production index rose 2.6 percentage points from the previous month to 53%, and the new orders index rose 1.2 percentage points from the previous month to 51.4%.

In the consumer goods manufacturing industry, in addition to the pull effect of policies such as trade-in, the market for consumer goods related to New Year's goods has heated up towards the end of the year. The consumer goods manufacturing PMI was 50.8%, up 1.3 percentage points from the previous month, returning to expansion territory after a brief contraction in October. Both the production index and the new orders index rose by more than 2 percentage points from the previous month, reaching more than 52% respectively.

Interpretation 4: Stable optimization of industrial structure

Large enterprises have maintained stable operation, and small and medium-sized enterprises have improved

In November, large enterprises continued to maintain a stable trend, and the PMI of large enterprises was 50.9%, down 0.6 percentage points from the previous month, but still maintained a good level of about 51%. The PMI of medium-sized enterprises was 50%, an increase of 0.6 percentage points from the previous month, ending the situation of being below 50% for six consecutive months and returning to the line of prosperity and decline. The production index of medium-sized enterprises increased by 0.6 percentage points from the previous month to more than 52%, and the new orders index increased by 0.8 percentage points from the previous month to more than 50%, indicating that market demand has picked up and production activities have accelerated growth.

The PMI of small enterprises was 49.1%, up 1.6 percentage points from the previous month, of which the production index increased by 3.9 percentage points from the previous month to more than 51%, and the new orders index increased by 2.4 percentage points from the previous month to more than 48%, showing that the demand decline of small enterprises has narrowed significantly, and production activities have rebounded significantly.

Business confidence has strengthened, and market outlook is rising

Judging from the recent trend of manufacturing PMI, the implementation of the stock policy and the package of incremental policies continues to increase, and the effect continues to appear. New technologies and new forms of business such as low-altitude economy and ice and snow economy have gradually started to drive related industries, contributing new impetus to economic growth. Business confidence was further strengthened, and the outlook for the market was expected to rise at an accelerated pace, with the expected index of production and business activities at 54.7%, up 0.7 percentage points from the previous month, rising for two consecutive months.