Manufacturing activity in China hit a three-year low in November, an industry survey shows, supporting the case for more accommodative policies as authorities seek to prop up growth in the world’s second-largest economy.
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The official Purchasing Managers’ Index (PMI) was 49.6 in November, compared with the previous month’s reading of 49.8 and with forecasts by analysts polled by Reuters, who had predicted a reading of 49.8.
The figure of 49.6 marked a further fall from October’s 49.8, and the fourth month the PMI index had been in negative territory, state media reported.
A reading below 50 points suggests a contraction in activity while a reading above signifies an expansion on a monthly basis.
As regards the most important sub-indices, the production quantity sub-index rose relative to October and after signalling contraction for two month it has been showing expansion for the 3rd month in a row. A reading above 50 on this survey-based index denotes expansion.
CHINA CURRENCY: The inclusion of the yuan with the dollar, pound, euro and yen in the IMF’s yardstick basket reflects the rising importance of China’s economy and its currency.
“Asia’s economy looks decidedly wobbly going into year-end”.
Services, which have helped offset the weakness in manufacturing, showed some improvement.
British manufacturing growth slowed last month from the rapid pace recorded in October, but remained above lacklustre rates seen earlier in the year as export orders picked up, a business survey showed on Tuesday.
The increase in the November PMI “indicates that pressure on economic growth has eased and fiscal policy has had a strong effect”, said He Fan, chief economist at Caixin Insight Group. However, it also said that domestic demand was weak, with companies still laying off workers – though at their slowest pace since May.
China’s economy continues to decelerate despite authorities’ repeated attempts to reverse the decline through interest rate cuts and other stimulus measures.
The November PMI from the Markit’s Nikkei Malaysia Manufacturing Purchasing Managers’ Index was 47.0, down from 48.1 in October.
“Though it may be premature to call this a trend, at least the numbers are heading higher”, said Mr Seah.
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Officials say growth decelerated to 6.9 percent in the July-September period, its slowest rate since the aftermath of the financial crisis.
