Man­u­fac­tur­ing PMI weakens to low­est in three years

China Daily (Canada) - - CHINA - By BLOOMBERG

China’s man­u­fac­tur­ing con­di­tions slipped to the weak­est level in more than three years as slug­gish­ness in the na­tion’s old growth driv­ers added to risks fac­ing the gov­ern­ment’s growth tar­get.

The of­fi­cial pur­chas­ing man­agers in­dex fell to 49.6 in Novem­ber, the Na­tional Bureau of Sta­tis­tics said on Tues­day — the low­est level since Au­gust 2012. That com­pared with a level of 49.8 for Septem­ber and Oc­to­ber. The non­man­u­fac­tur­ing PMI rose to 53.6 from 53.1 a month ear­lier. Num­bers be­low 50 in­di­cate a slow­down.

“The data show fur­ther di­ver­gence in man­u­fac­tur­ing and non­man­u­fac­tur­ing sec­tors,” said Zhu Qib­ing, a Beijing-based an­a­lyst at China Minzu Se­cu­ri­ties. “Con­sid­er­ing fur­ther cuts in over­ca­pac­ity, the di­ver­gence will con­tinue into at least mid2016.”

Read­ings of out­put, new or­ders, in­ven­to­ries and em­ploy­ment all weak­ened from Oc­to­ber, the of­fi­cial man­u­fac­tur­ing PMI re­port showed. In­put prices for raw ma­te­ri­als slumped to the low­est point this year, ac­cord­ing to an NBS state­ment.

“De­fla­tion­ary pres­sures are ris­ing,” saidQuHong­bin, chief China econ­o­mist and co-head of Asian eco­nomic re­search at HSBC Hold­ings in Hong Kong. “Since en­trenched de­fla­tion would ex­ac­er­bate the debt prob­lem and risk a down­ward spi­ral, now is the time for Beijing to act in a more de­ci­sive and co­or­di­nated man­ner to lift con­fi­dence and end de­fla­tion.”

Arangeof pri­vate in­di­ca­tors for Novem­ber had sug­gested con­di­tions re­mained weak for China’s in­dus­trial sec­tor.

A PMI read­ing for the steel in­dus­try slumped to 37 in Novem­ber.

“The steel sec­tor in China con­tin­ues to come un­der over­ca­pac­ity pres­sures as well as de­clin­ing de­mand on the back of slump­ing property in­vest­ment,” ac­cord­ing to a re­cent re­port by Liu Li-Gang, head of China eco­nomics at Aus­tralia & New Zealand Bank­ing Group in Hong Kong.

To com­bat

the down­turn, the Peo­ple’s Bank of China has cut bench­mark bor­row­ing costs to a record low and is adding funds to the bank­ing sys­tem as it moves to a new­mon­e­tary frame­work.

“Sub­stan­tial pol­icy sup­port has yet to make the econ­omy any bet­ter, though it has at least stopped it from get­ting worse,” Bloomberg In­tel­li­gence econ­o­mists Tom Or­lik and Field­ing Chen wrote in a note. “Pol­icy will re­main sup­port­ive, in­clud­ing fur­ther rate cuts in 2016 and amped up fis­cal spend­ing. Ac­cel­er­ated eas­ing is not yet called for.”

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