China manufacturing index falls to more than 3 year low

GMT 08:54 2015 Tuesday ,01 December

Arab Today, arab today China manufacturing index falls to more than 3 year low

China economy
Beijing - AFP

A key measure of China's manufacturing activity dropped to its weakest level in more than three years in November, data showed Tuesday, underlining weaknesses in the world's second largest economy.

The official Purchasing Managers' Index (PMI), which tracks activity in the crucial factories and workshops sector, fell to 49.6, the government statistics bureau said.

It (Other OTC: ITGL - news) was the fourth consecutive month of decline and the lowest figure since August 2012, and slightly below the expectations of economists surveyed by Bloomberg.

Investors closely watch the index as a barometer of the country's economic health. A reading above 50 signals expanding activity while anything below indicates shrinkage.

The statistics bureau blamed the disappointing figure on weak overseas and domestic demand, falling commodity prices and manufacturers' reluctance to restock.

"Facing downward pressures on the economy, companies' buying activities slowed and their will to restock was insufficient," it said in a separate statement.

China's economy expanded 7.3 percent last year, the slowest pace since 1990, the government says, and at 7.0 percent in each of the first two quarters of this year.

Officials say it decelerated further to 6.9 percent in the July-September period, its slowest rate since the aftermath of the financial crisis.

But those statistics are widely doubted and many analysts belive the real rate of growth could be several percentage points lower.

The government has depended on monetary loosening to stimulate growth. In October it cut interest rates by 0.25 percent -- the sixth reduction in a year -- and abolished the official cap on interest rates for savers.

But state intervention struggled to halt a stock market rout this summer, increasing doubts over policymakers' ability to transition to a more market-based economy.

Analysts said the weak PMI will prompt Beijing to take further loosening measures.

"With (Other OTC: WWTH - news) soft growth momentum and deflation pressures creeping up, we expect the authorities to further ease monetary policy," economists from Australian bank ANZ said in a note.


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