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Weekly Indicators: Global Manufacturing PMI and Jobs Report

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Part 9
Weekly Indicators: Global Manufacturing PMI and Jobs Report PART 9 OF 14

China’s Manufacturing PMI Improved: Will It Stay Strong?

China’s manufacturing PMI

According to a report by the National Bureau of Statistics of China, China’s final Manufacturing PMI (Purchasing Managers’ Index) was 51.7 in November 2016 compared to 51.2 in October. It beat market expectations of 51.0.

China’s Manufacturing PMI for November was the highest since July 2014.

China’s Manufacturing PMI Improved: Will It Stay Strong?

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The China (ASHR) (YINN) Caixin Manufacturing PMI, which tracks small and mid-sized companies, was 50.9 in November 2016 compared to 51.2 in October. It beat market expectations of 50.8 and was in the expansion zone.

The rise in China’s Manufacturing PMI in November 2016 is mainly due to the following factors:

  • Production output rose at a higher rate in November compared to October.
  • Exports orders improved in November, while new orders fell slightly.
  • Employment growth improved marginally in November compared to October.

Impact on the economy

After nearly two years, China’s factory output rose at a faster pace in November 2016. Now, the biggest question in investors’ minds is whether China’s (YINN) economic growth will also rise in the upcoming quarters.

A weaker global (ACWI) (VT) demand is hampering growth in China’s manufacturing sector. However, business confidence has improved. Business expectations rose marginally.

After Donald Trump won the US presidential election, uncertainties about trade relations between China (ASHR) and the United States (IVV) (VOO) have increased. Many market participants believe that Trump has a protectionist approach. He said many times during his campaign that he will bring jobs back to the United States (VFINX) (IWM).

Trump’s approach could restrict financial and trade flows with China (MCHI) as well as Mexico. If this happens, there could be a huge shift in global trade.

In the next part of this series, we’ll take a look at the performance of US crude oil inventories for the week ended November 25, 2016.

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