Despite the improvement, this was the fourth straight month that the index remained below the neutral 50-point mark, suggesting that factory sector output growth remains under pressure.
Furthermore, the average for the first two months of Q4 is 1.8 points below that of Q3. In the absence of official manufacturing production data for Q4, the PMI suggests that output is likely to remain subdued after a 1.3% quarter-on-quarter contraction in manufacturing production in the Q3.
Two of the key subcomponents of the headline PMI showed an encouraging improvement in November. Most notable is the 6.9-point increase in the new sales orders index to 51.4 index points. Higher export orders likely drove this improvement with local (consumer) demand remaining under pressure.
Increased orders helped lift the business activity index to 48.9 index points in November, up from 43.5 in October. Despite the improvement, the business activity index has now been below 50 for five consecutive months.
Also lingering below 50 points is the inventory index, which fell by a further 2 index points to 45.2 in November. On a positive note, this means that the new sales orders index outstripped the inventories index, resulting in the PMI leading indicator edging above 1 – this usually bodes well for production going forward.
Overall, purchasing managers were also slightly more upbeat about business conditions during the first half of 2017. The index measuring expected business conditions in six months’ time rose by 3.3 points to 53.9 in November after plunging by 13.2 points in October.
Meanwhile, after moving lower for four consecutive months, the price index reversed the trend and rose to 65.6 points in November, up from 59.4 in October. The increase was likely driven by the hefty fuel price hike at the start of November, but the expected fuel price decline in December could alleviate some of the upward pressure on costs.