China factory activity slumps to 32-month low

Discussion in 'China' started by JAISWAL, Nov 23, 2011.


    JAISWAL Senior Member Senior Member

    Mar 13, 2010
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    China factory activity slumps to 32-month low | Reuters
    China factory activity slumps to 32-month low

    Wed, Nov 23 02:13 AM EST
    By Koh Gui Qing
    BEIJING (Reuters) - Chinese factories battled with
    their weakest activity in 32 months in November,
    a preliminary purchasing managers' survey
    showed, reviving worries that China may be
    skidding toward an economic hard landing and
    compounding global recession fears.
    The HSBC flash manufacturing purchasing
    managers' index (PMI), the earliest indicator of
    China's industrial activity, slumped in November
    to 48, a low not seen since March 2009.
    The data showed the world's growth engine is
    not immune to economic troubles abroad, and
    could further unnerve financial markets already
    roiled by Europe's deteriorating debt crisis.
    November's flash reading is a sharp three-point
    fall from October's final figure of 51 and indicated
    Chinese factory output shrank on the month in
    November. A PMI reading of 50 demarcates
    expansion from contraction.
    The last time the PMI slipped below 50 was in
    September, when the index hit 49.9.
    "Industrial production growth is likely to slow
    further to 11-12 percent year-on-year in coming
    months as domestic demand cools and external
    demand is set to weaken," said Qu Hongbin, a
    HSBC economist.
    In line with the dismal headline number, the flash
    output sub-index tumbled to a 32-month low of
    46.7, a steep drop from October's final reading
    of 51.4.
    The marked slowdown in activity cooled factory
    inflation sharply. The sub-indices for input and
    output prices sunk around 10 points each to
    below 50, hugging lows last seen in April 2009.
    New export orders were the only bright spot in
    the survey, holding steady from October to stay
    above 50.
    But the sub-index for new orders suffered its
    biggest drop in 1- years to sink well below the
    50-point mark, suggesting factories received
    fewer orders on the whole in November even
    though export orders held up.
    Unlike China's official PMI which is published by
    Beijing and tilts toward large state firms, the
    HSBC PMI surveys are skewed toward private
    companies that have been harder hit by China's
    monetary tightening campaign.
    As recent as July, China raised interest rates for
    the third time this year in a bid to calm rising
    consumer prices.
    Weighed by tight domestic monetary conditions
    and waning demand in its two biggest export
    markets, Europe and the United States, China's
    economy lost steam in the third quarter and all
    signs suggest it would slow further.
    Easing activity puts pressure on Beijing to relax
    monetary policy at the margins by loosening
    bank lending restrictions, for instance. But until
    Europe's crisis gets out of hand, few analysts
    think China is ready to cut interest rates.
    Growth in exports hit eight-month lows in
    October as manufacturing output grew at its
    weakest in a year. The exuberant Chinese
    property market is also coming off a boil to drag
    on real estate construction and investment.
    But HSBC's Qu argued China is still headed for a
    soft-landing as cooling inflation gives Beijing
    more room to ease policy and support
    economic growth if needed.
    "As inflation is likely to decelerate at a faster-than-
    expected pace, it will leave more room for
    Beijing to step up selective easing measures,
    which should gradually filter through to keep
    China on track for a soft-landing," he said.
    A slackening economy pulled China's inflation to
    5.5 percent in October, down from three-year
    peaks of 6.5 percent struck in July.
    The flash PMI is based on up to 90 percent of
    total responses to the monthly survey and is a
    snapshot of the final data. HSBC stared
    publishing the series in February.
  3. Galaxy

    Galaxy Elite Member Elite Member

    Aug 27, 2011
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    mate, Don't post any news/article Via Mobile. If you are doing through PC/Laptop, then 1st copy the content to Notepad and then from notepad to this forum. Copy fro site to forum as it is will add lots of links/codes and will give error or/and alignment/paragraph problem which will make difficult to read for members.


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