HONG KONG: China’s factories notched their strongest growth in activity in two years and Japanese firms’ order books rose in November, masking concern about the protectionist leanings of US President-elect Donald Trump and an Opec-induced oil price rally.
Factory surveys produced stronger purchasing manager index (PMI) numbers in China, Taiwan and Vietnam, and while activity in Japan’s factories was still growing in November, the pace was slower than in October. China’s official PMI rose to 51.7 in November from October’s 51.2, staying above the 50-point mark that separates growth from contraction on a monthly basis. The index was stronger than economists polled by Reuters had expected and matched a level last seen in July 2014.
But analysts noted a worrying lack of expansion in new export orders for Chinese factories, suggesting the stronger headline number was consequence of demand coming from its frothy property sector, which authorities are trying to cool.
The unofficial Caixin survey showed a more modest increase in activity, perhaps because it focuses on smaller firms which benefit less from government support for the economy.
While growth in activity was slower in Japan, a sub-index for new orders, which measures both domestic and external demand, rose to a 10-month high of 51.1 in November, up from 50.8 in October.
Elsewhere in Asia, India’s factory activity was still expanding but growth slowed in November, resulting in the biggest month-on-month decline in its PMI since March 2013.
The index dropped to 52.3 in November from 54.4 a month earlier.