(Yicai) Dec. 2 -- Factory activity among China's smaller manufacturers expanded the most in November since July, driven by renewed records in new orders and business expectations amid effective stimulus policies.

The Caixin/S&P Global manufacturing purchasing manager’s index came in at 51.5, up 1.2 points from October, marking the second straight month of expansion, according to the latest data from the private survey publisher.

The trend is consistent with the official PMI tracking larger companies. The official manufacturing PMI for November rose 0.2 points to 50.3, also remaining above the 50-point mark for the second consecutive month, based on data released by the National Bureau of Statistics over the weekend.

Caixin's sub-index of production beat a record seen in July and that for new orders surged to the highest since March 2023. Surveyed companies noted that improvements in demand fundamentals and the launch of new products underscored growth in new orders. The sub-index of new export orders rebounded to surpass the 50-point mark, reaching a seven-month high. The boost came from investment and intermediate goods segments, while makers of consumer goods saw a slight decline in export orders.

Strong Sentiment But Weak Employment

Despite robust order volumes, the conflicting trends in hiring and business sentiment underscore the need for additional policy support.

The employment index edged up slightly but remained in contraction territory for the third consecutive month, indicating marginal improvement.

The index for business expectations jumped to its highest level in eight months, just slightly below the long-term average. Manufacturers reported that the environment has improved with policy support and anticipate sales growth next year.

Since late September, existing policies and additional stimulus measures have affected the market, contributing to an accelerated recovery in November, said Wang She, senior economist at Caixin Insight Group.

However, prominent downward pressures persist, marked by continued employment contraction, which suggests that the economic stimulus's effect has yet to be fully felt in the labor market. Businesses' confidence in expanding their workforce needs to be strengthened, Wang added.

While the economic downturn appears to be bottoming out, it requires further consolidation, Wang said, adding that the structural and cyclical pressures facing the economy are expected to continue, and external uncertainties are likely to worsen, calling for sufficient policy buffers.

Editor: Emmi Laine