BEIJING, Dec 1 (BSS/AFP) - China's manufacturing activity contracted in November for the first time in 33 months, official data showed today, as deepening global economic woes impact the country's key export sector.
The purchasing managers index (PMI) fell to 49 last month, down 1.4 points from October, marking the first contraction since February 2009, the China Federation of Logistics and Purchasing said in a statement.
A reading above 50 indicates the sector is expanding while areading below 50 suggests a contraction.
HSBC said its manufacturing activity index also fell to a
32- month low of 47.7 in November from 51 in October, slightly
worse than preliminary data released last week and signalling a
"solid deterioration" in the sector.
IHS Global Insight analyst Alistair Thornton said the
"shocking" data showed the world's second largest economy was
"sagging under the weight of this year's credit tightening".
Most of the measures in the official survey deteriorated in
November, with new orders and new export orders contracting,
suggesting weakening demand in China as well as Europe and the
United States for Chinese-made products.
The weak figures signalled that China's economy "would
continue to slow", government analyst Zhang Liqun said in the
But he ruled out a "huge downfall" in the Asian powerhouse
due to the strength of domestic investment and consumption.
HSBC chief economist Qu Hongbin said the data, combined with
a faster than expected easing in inflation, implied "growth is
set to overtake inflation as Beijing's top policy concern".
China-economy-2 LAST, BEIJING
The latest PMI numbers come a day after authorities cut bank
reserve levels for the first time in three years to help boost
lending and spur growth to counter alarming signs of a domestic
slowdown and the crisis in key export markets.
Analysts had forecast such a move after the central bank
said recently it would "fine-tune" monetary policy amid growing
concerns that the weak global economy is increasing the risk of a
sharp slowdown in China.
"The message is clear: the economy is slowing much faster
than expected and the government has stepped into the ring. The
loosening campaign has begun," said Thornton.
"We expect this to feed through into slower industrial
production growth numbers for November, and slower gross domestic
product numbers for the fourth quarter."
The move to boost lending, which analysts estimate unlocked
350 billion yuan (about $55 billion) in liquidity, is the
strongest signal yet that the government wants to ease tight
credit restrictions put in place to curb surging inflation and
property prices -- now showing signs of easing.
China's property market, a mainstay of the Asian country,
has faced slumping sales and prices nationwide amid tough
government restrictions on property purchases and bank lending.
The country's consumer inflation eased in October to 5.5
percent, the slowest pace since May, while exports and imports
sank in October as slowing growth in China and overseas woes
sapped demand for Chinese goods.
Economic growth also slowed to an annual 9.1 percent in the
third quarter from 9.5 percent in the previous quarter.
China, anxious about rising living costs, has pulled on a
variety of levers to curb price rises in the past 18 months,
including restricting the amount of money banks can lend and
hiking interest rates five time since October 2010.