China’s Manufacturing Confidence Climbs to 13-Month High in November. But Many Companies are still Impacted by Covid Related Issues

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Updated: November 21, 2022

Although half of all Chinese Sales Managers Manufacturing Indexes were treading water in November, Business Confidence has been steadily recovering and is now at its highest level in more than a year. And all Manufacturing Indexes rose to a better end of month position than was the case a month ago. Overall the manufacturing situation can perhaps best be described as one of stagnation, but with increasing and quite widely spread confidence that matters will improve over the next few months.

Manufacturing & Service Sector Business confidence in November

Source: World Economics
Note: Data Shown as a Diffusion Index. (50 = 'No Change', above 50 = Increasing growth, below 50 = Declining growth)

The continued stagnation of the Manufacturing sector, was more than mirrored in the large Services area of business activity. Of the growth related indexes, only the Business Confidence Index managed to creep over the no change 50 mark, and then hardly to an awe inspiring degree... suggesting China has some way to go before it can benefit from overall economic growth at levels anywhere near to those recorded pre Covid.

Measured over all sectors, the Chinese economy still does not look well placed, with Covid restrictions still impacting negatively on many of the companies in our survey. However Business Confidence, the "Animal Spirits" Index, does appear to provide hope that once the hurdle of the Covid problem can be cleared, economic growth might follow relatively quickly.

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About the Sales Managers Indexes

The Sales Managers' Indexes provide the earliest monthly data on the speed and direction of economic activity in key growth areas of the world.

The SMI’s (Sales Managers’ Indexes) are compiled and analysed by World Economics and are based on survey data collected from a panel of companies stratifying all Industry Classification Board (ICB) sectors which are weighted to reflect their contribution to national Gross Domestic Product.

Key advantages of the SMI's:

• The SMI's provide the first indication each month of the speed and direction of economic growth.
• The SMI's provide the most complete indication of growth, covering all private sector activity.
• The SMI's are based on a key occupational group - sales executives - uniquely able to sense accurate changes in business activity levels.
• The SMI survey base - salespeople - are used by virtually all businesses, including in frontier markets, unlike other occupational groups.
• The SMI's focus on the key countries contributing to over 60% of China growth in recent years.