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http://www.theaustralian.com.au/bus...e-china-weakness/story-e6frg926-1227629640257
Manufacturing data underline China weakness
Grace Zhu||Dow Jones|December 1, 2015 2:43PM
An official gauge of China’s manufacturing activity fell to its lowest level in more than three years, fuelling fears that the world’s second-largest economy may be cooling further despite a raft of government stimulus measures.
A competing private-sector equivalent measure ticked up but still lingered in contractionary territory, pointing to sagging growth momentum due to weak demand both at home and abroad for China’s goods.
The readings suggest a weak fourth quarter will make it even more difficult for China to hit its economic growth target for the year, which is already set to post its slowest pace in 25 years.
China’s official manufacturing purchasing managers index, a gauge of the nation’s factory activity, fell to 49.6 in November from 49.8 a month earlier, missing the median 49.9 forecast from a Wall Street Journal poll of 13 economists.
The reading was the lowest level since August 2012, when the index hit 49.2, and it also marks the fourth straight month below the 50 mark that separates manufacturing expansion from contraction.
Zhao Qinghe, an economist with China’s National Bureau of Statistics, said the lower-than-expected PMI reading was mainly due to sluggish demand. Chinese manufacturers also scaled back their purchasing as the economy faces more downward pressure, he added.
The competing gauge — the Caixin China manufacturing purchasing managers index, which gives a greater weighting to smaller, export-led companies — picked up to 48.6 in November from 48.3 in October. The Caixin PMI has been in contractionary territory for nine months.
Sluggish demand at home and abroad has saddled Chinese factories with idle capacity and forced them to cut prices. The nation’s producer-price index has stayed in deflationary territory for more than three years.
“With soft growth momentum and deflation pressures creeping up, we expect the authorities to further ease monetary policy and continue to implement an expansionary fiscal policy to prevent further slowdown of the economy in 2016,” said ANZ economists Li-Gang Liu and Louis Lam in a research note.
Chinese economy grew 6.9 per cent in the third quarter of the year, its worst performance since the global crisis. To shore up growth, Beijing cut its benchmark interest rates for six times in the past year, revved up government spending and stepped up investment approval. China has set a growth target for this year of about 7 per cent.
Off the factory floors, the economic picture offered more hope. China’s official non-manufacturing purchasing managers index, also released today, rose to 53.6 in November from 53.1 in October.
“China’s manufacturing sector continues to shrink amid overcapacity problems and weak demand,” said Standard Chartered economist Ding Shuang. “However, we should also notice the fast expansion of the service sector, which could help offset the slowdown in China’s factories.”
China’s service sector has been a bright spot in the economy, helping to offset a sharp slowdown in traditional industries. In the first three quarters of 2015, services accounted for 51.4 per cent of the economy, up from 49.1 per cent during the same period of 2014.
DOW JONES
Posted for fair use.....
http://www.theaustralian.com.au/bus...e-china-weakness/story-e6frg926-1227629640257
Manufacturing data underline China weakness
Grace Zhu||Dow Jones|December 1, 2015 2:43PM
An official gauge of China’s manufacturing activity fell to its lowest level in more than three years, fuelling fears that the world’s second-largest economy may be cooling further despite a raft of government stimulus measures.
A competing private-sector equivalent measure ticked up but still lingered in contractionary territory, pointing to sagging growth momentum due to weak demand both at home and abroad for China’s goods.
The readings suggest a weak fourth quarter will make it even more difficult for China to hit its economic growth target for the year, which is already set to post its slowest pace in 25 years.
China’s official manufacturing purchasing managers index, a gauge of the nation’s factory activity, fell to 49.6 in November from 49.8 a month earlier, missing the median 49.9 forecast from a Wall Street Journal poll of 13 economists.
The reading was the lowest level since August 2012, when the index hit 49.2, and it also marks the fourth straight month below the 50 mark that separates manufacturing expansion from contraction.
Zhao Qinghe, an economist with China’s National Bureau of Statistics, said the lower-than-expected PMI reading was mainly due to sluggish demand. Chinese manufacturers also scaled back their purchasing as the economy faces more downward pressure, he added.
The competing gauge — the Caixin China manufacturing purchasing managers index, which gives a greater weighting to smaller, export-led companies — picked up to 48.6 in November from 48.3 in October. The Caixin PMI has been in contractionary territory for nine months.
Sluggish demand at home and abroad has saddled Chinese factories with idle capacity and forced them to cut prices. The nation’s producer-price index has stayed in deflationary territory for more than three years.
“With soft growth momentum and deflation pressures creeping up, we expect the authorities to further ease monetary policy and continue to implement an expansionary fiscal policy to prevent further slowdown of the economy in 2016,” said ANZ economists Li-Gang Liu and Louis Lam in a research note.
Chinese economy grew 6.9 per cent in the third quarter of the year, its worst performance since the global crisis. To shore up growth, Beijing cut its benchmark interest rates for six times in the past year, revved up government spending and stepped up investment approval. China has set a growth target for this year of about 7 per cent.
Off the factory floors, the economic picture offered more hope. China’s official non-manufacturing purchasing managers index, also released today, rose to 53.6 in November from 53.1 in October.
“China’s manufacturing sector continues to shrink amid overcapacity problems and weak demand,” said Standard Chartered economist Ding Shuang. “However, we should also notice the fast expansion of the service sector, which could help offset the slowdown in China’s factories.”
China’s service sector has been a bright spot in the economy, helping to offset a sharp slowdown in traditional industries. In the first three quarters of 2015, services accounted for 51.4 per cent of the economy, up from 49.1 per cent during the same period of 2014.
DOW JONES
