​China factory output continues to slow

Both the official PMI and the HSBC PMI results
show China’s manufacturing sector continuing to slow.

Reuters reports that the official Purchasing Managers
Index, favouring larger, state=owned factories, fell to an eight-month low of
50.3 for November.

A score of 50 separates expansion from
contraction.

The HSBC/Markit China PMI – favouring smaller,
privately-owned factories – was also lower in November, down to a six-month low
of exactly 50.

The official PMI, compiled by the National Bureau
of Statistics, found exports were weaker for the month, and there was slower
growth in output and new orders. Inventories of raw materials remained in
contraction.

The Wall Street Journal polled economists before
the results were released, and the official PMI was lower than their
predictions.

“The PMI data suggests that fundamentals are still very weak,” Macquarie Group economist Larry Hu told the WSJ.

“Investment in property and manufacturing remains weak, so the
government is the only one spending. And when government spending wanes in the
winter months, the economy falls off.”

The result follows an unexpected interest rate cut on November
21 by the People’s Bank of China, and there are predictions, including from
ANZ, that further stimulus may follow as China attempts to maintain a growth
rate of 7.5 per cent.

The official PMI result of 50.3 is down from October’s 50.8 and September’s 51.1.

Image: http://ap-perspective.blogspot.com.au/

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