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Factory activity among smaller Chinese firms improved slightly in November from the previous month, helped by the ramp up in demand ahead of the seasonal year-end festivities. The number was better-than-expected compared to the flat forecast from analysts who had expected worse results due effects from the United States (US)-China trade war.
The Caixin/Markit Manufacturing purchasing managers’ index (PMI) for November was at 50.2 points, edging up slightly compared to 50.1 points in October. Economists in a Reuters poll had expected the sector to fall flat on the 50-mark that separates expansion and contraction, at a reading of 50.0 points.
For last month, new export orders extended their contractionary phase, shrinking to 47.7 points from 48.8 points a month earlier. New orders improved to 50.9 points in November compared to 50.4 points previously.
Official PMI numbers released on Friday showed China’s manufacturing sector stalling the first time in over two years in November at 50.0 points, falling below analysts’ expectations.
China has been embroiled in a scathing trade war with the US in recent months, affecting manufacturing demand as goods get more expensive. The US has hit a total US$250 billion worth of Chinese goods with tariffs since July, and China has retaliated by imposing duties on US$110 billion of US goods.
Over the weekend, both countries called for a truce on their tariff war at the G20 Summit. Mr Trump will postpone the plan to raise tariffs on US$200 billion worth of Chinese goods from 10% to 25% coming January 1. Mr Xi on the other side of the bench agreed to an undisclosed amount of increase in their purchases of US industrial, energy and agricultural products.
Both sides aim to reach an arrangement on a broader trade agreement within 90 days.
International Monetary Fund’s chief Christine Lagarde has already stepped forward to state that the impact of trade tensions on global growth is causing worse than expected repercussions, calling the rise of trade barriers a “self-defeating” strategy “for all involved”.