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The MNI China Business Indicator eased to 53.3 in November from 55.3 in October,causing the three month trend to fall to the lowest for 12 months.
Both New Orders and Production Indicators also fell back in November, but New Orders in particular remained firm, pointing to a more sustained positive impact from the mini-stimulus measures announced after the July State Council meeting.
Companies continued to remain optimistic about business conditions over the next three months with the Future Expectations Indicator increasing to 57.9 in November from 57.6 in the previous month. Hopes had been running high, both domestically and internationally, that the “third plenum” of the Chinese Communist party’s 18th Central Committee would unveil a series of reforms after its meeting in November, the results of which were not known by the time the survey concluded.
An increased number of firms reported that the level of the exchange rate was hurting business in November, as the yuan hit a new high against the US dollar.
Firms’ Financial Position worsened in November amid a further deterioration in credit conditions and a rise in the cost of credit.
Commenting on the data, MNI Indicators Chief Economist Philip Uglow said, “While firms reported a weakening in overall business conditions, other demand indicators such as New Orders and Production held up better.”
“Firms, though, face tougher credit conditions and there is a question about whether the recent pick-up following the mini-stimulus will be sustained. Reforms announced after the third plenum could, however, support business confidence ahead,” he added.
