Chinas Economy Maintains Steady Expansion in November, Supported by Rising Prices and Market Growth:

China's Economy Maintains Steady Expansion in November, Supported by Rising Prices and Market Growth

The November Sales Managers Index (SMI) for China suggests continued moderate economic expansion continues, with the Headline All-Sector SMI reaching 51.3, a four-month high. Growth remains broadly balanced across sectors, supported by the strongest pricing power in over three years and a notable recovery in perceived market growth. Despite persistent external pressures, the economy has now recorded four consecutive months of Headline SMI above 51, and seven above the critical 50: no growth threshold, underlining a phase of quiet stabilisation following earlier softness earlier in the year.

Across all sectors in November was the sharp rise in the Prices Charged Index to 52.0, its highest level in over 3 years, signalling the strongest upward pricing trend since mid-2022. This reflects growing ability among businesses to pass on costs and secure better margins after a prolonged period of price weakness earlier in the year. The Market Growth Index also continued its gradual recovery, reaching an almost 2-year high, moving closer to the expansion threshold. Sales growth remained firm, easing only marginally from the previous month’s strong levels, while business confidence softened slightly but stayed comfortably in expansion territory. Staffing levels held steady near 50, indicating neither significant hiring nor layoffs across the economy.

China: Prices Charged by Manufacturing and Services Sectors
Diffusion Index: 50 = ’no growth’

MANUFACTURING SECTOR:
Manufacturing activity moderated only slightly in November, with the sector Headline SMI remaining in modest expansion territory for the fourth straight month. The Prices Charged Index rose further to 50.9, a 10-month high, showing manufacturers are increasingly able to lift selling prices amid firmer demand conditions. Market growth perceptions improved to the strongest since mid-2023, reflecting gradual optimism about future orders. Sales growth stayed robust, supported by sustained domestic and export order flows. Staffing levels eased after recent gains but remained close to neutral, while business confidence cooled modestly yet stayed well above 50, consistent with a sector that continues to benefit from inventory rebuilding and policy support.

SERVICES SECTOR:
The services sector posted its strongest Headline SMI in four months at 51.8, extending a solid upward trend seen since mid-year. Pricing power was particularly pronounced, with the Prices Charged Index jumping to a 26-month high. This points to clear margin improvement in a sector that had faced prolonged price deflation earlier in the recovery cycle. Market growth perceptions reached a six-month high, while staffing levels recorded a five-month high at 50.2, signalling low but renewed willingness to add headcount. Sales growth eased marginally from October’s elevated level but remained strong, and confidence in future business activity held firm in expansion territory. The combination of rising prices, improving labour indicators, and sustained demand underlines services as a key pillar of the current steady growth phase.

SUMMARY:
November’s SMI readings reinforce a picture of gradual but resilient economic expansion in China, now sustained for several months. Rising pricing power across both manufacturing and services, alongside recovering perceptions of market growth, suggests that domestic demand is gaining traction and businesses are regaining pricing leverage after an extended soft patch. While external trade frictions persist, the data continues to reflect an economy successfully stabilising through a mix of policy support and improving private-sector sentiment.

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