PMI upturn, but SMEs still need support

China's manufacturing sector expanded in November for the first time in seven months, the National Bureau of Statistics said on Saturday, indicating that the confidence of enterprises has been boosted by expectations of at least a partial trade deal with the United States.

The purchasing managers' index for manufacturing industries, a monthly barometer of factory vitality, rose to 50.2 percent last month, up from 49.3 in October, the first time the index has reached above the expansion-contraction demarcation line of 50 percent since April, while the non-manufacturing PMI hit a four-month high of 54.4 percent. The improvement of the manufacturing PMI was broadly based, with the subindices of production, new orders and raw materials inventory all rising, showing there have been demand and supply side improvements, and growth drivers have recovered.

But although a positive sign that the downward pressure on the economy in the fourth quarter has eased to some extent, it would be unrealistic to simply equate the pick-up in manufacturing activity to a fundamental reverse of the declining trend, as seasonal external demand has been another factor fueling the uptick in manufacturing.