China Oct factory activity up

BEIJING, Dec 03 (Reuters): China's factory activity grew slightly in November, a private survey showed, though new export orders extended their decline in a further blow to the sector already hurt by the Sino-US trade frictions.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) for November, released on Monday, ticked up to 50.2 from 50.1 in October.

Economists polled by Reuters had forecast a reading of 50.0, the level that separates expansion from contraction.

Domestic orders have been losing momentum in recent quarters as the world's second-largest economy slows.

Overall, a sub-index measuring new orders did improve slightly to 50.9 in November from 50.4 in the previous month, after manufacturers cut prices.

Exports have held up so far, but the lingering threat of higher US tariffs next year amid a trade war with the United States, China's No.1 trade partner, remained a drag on Chinese manufacturing.

That risk was underscored by the sub-index for new export orders shrinking to 47.7 in November from 48.8 a month earlier, amid relatively weak global demand conditions, according to the survey.

Over the weekend, on the sidelines of the G20 summit in Argentina, China and the United States agreed to suspend additional tariffs in a deal that keeps their trade war from escalating for now.

Trump said he would not increase tariffs on $200 billion of Chinese goods to 25 per cent on January 1 as previously announced, with the two sides aiming to reach an agreement within 90 days.

"Sentiment among exporters may improve during the next couple of months thanks to the tariff ceasefire agreed to by Trump and Xi over the weekend," Julian Evans-Pritchard, senior China economist at Capital Economics, wrote in a note.

"While this may help to buoy the PMIs temporarily, we doubt it will prevent China's economy from slowing in the coming quarters."

A more immediate worry for Chinese manufacturers is weak domestic demand.

The Caixin survey showed ebbing client orders weighing on China's factory output, which stalled in November after months of expansion, the survey showed.