November’s Caixin PMI shows an unexpected comeback in Chinese manufacturing activity.

In an unforeseen development, Chinese manufacturing activity rebounded into expansion in November, according to a private survey on Friday. A slight uptick in domestic demand played a role in counteracting the continual decrease in overseas orders.

In November, the Caixin Manufacturing Purchasing Managers’ Index (PMI) surged to 50.7, surpassing projections of 49.3 and marking a significant improvement from the previous month’s figure of 49.6.

A figure surpassing 50 signifies expansion, and the Caixin survey has now returned to a growth trajectory following an unanticipated contraction in October.

The results diverged from the government PMI data released on Thursday, indicating a more significant-than-anticipated drop-in manufacturing activity. However, the Caixin survey deviates from the official survey in its emphasis on smaller, private enterprises, unlike the larger, state-run enterprises covered in the government survey. Typically, investors rely on both surveys to obtain a more comprehensive view of the Chinese economy.

Nonetheless, the data released on Friday showed signs of enhancement in China’s primary economic drivers. This improvement was particularly notable as Beijing accelerated its provision of liquidity injections and supportive measures in the preceding month. The boost in local new business orders played a crucial role in supporting manufacturing activity, partially mitigating the ongoing decrease in overseas demand.

“In the macroeconomic landscape, there is a noticeable recovery. Household consumption, industrial production, and market sentiments have all witnessed improvements. However, both domestic and foreign demand still fall short, employment pressure remains elevated, and the economic recovery has yet to establish a stable foundation,” remarked Wang Zhe, a senior economist at Caixin Insight Group, in a written statement.

Zhe highlighted the persistent fragility of employment in the manufacturing sector, emphasizing the necessity for additional policy support to enhance both consumption and employment. Additionally, he acknowledged that the Chinese economy continues to align with the government’s annual growth target of 5%.

Beijing plans to initiate a bond issuance totaling 1 trillion yuan ($139 billion) to stimulate infrastructure spending and foster economic growth in the forthcoming months. Additionally, the government is gearing up to provide further funding support for China’s struggling property sector, a significant impediment to economic growth in the last three years.