PMI expands at slowest pace in 7 months
Print Edition
CHINA’S manufacturing sector grew at its slowest pace in seven months in November, in a new sign that an economic slowdown is deepening.
The official Purchasing Managers’ Index, a comprehensive gauge of operating conditions in large industrial companies, fell to 50.3 in November, down 0.5 points from October, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said yesterday.
While a reading above 50 indicates expansion, the November figure was the fourth straight month of weaker growth and the lowest since March.
Zhao Qinghe, a researcher at the statistics bureau, said manufacturing grew slower partly due to the government’s enhanced efforts to control excess industrial capacity by closing inefficient factories or plants that pollute too much.
Zhu Haibin, JPMorgan’s China chief economist, said the November activity in particular might be adversely affected by the temporary shutdown of high-pollution factories during the APEC meetings.
The sub-indexes also sent alarming signals. Production fell 0.6 points from October to 52.5 in November, new orders shed 0.7 points to 50.9, and employment slid 0.2 points to 48.2.
“The further easing in November manufacturing PMI readings support our view that China’s economic growth has been moderating into the fourth quarter,” Zhu said.
Meanwhile, the HSBC China Manufacturing Purchasing Managers’ Index, weighted toward private and export-oriented manufacturers, stood at 50 in November, a six-month low, according to HSBC and research firm Markit yesterday. The index was down from 50.4 in October.
China’s gross domestic product grew 7.3 percent from a year earlier in the third quarter, the slowest pace in over five years led by corrections in the property sector.
Qu Hongbin, chief economist for China at HSBC, expected policies to moderate further to offset the sluggish domestic demand after the People’s Bank of China last month cut benchmark interest rates, the first such move since July 2012.
“The central bank’s rate cuts will help stabilize property and manufacturing investment in the coming months,” Qu said. “We continue to expect further monetary and fiscal easing measures to counter the downside risks to growth.”
JPMorgan’s Zhu also predicted at least one more rate cut, likely in the first quarter of next year, as well as two reserve requirement ratio cuts.
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