China 8217 s manufacturing growth slows down

Two surveys highlighted a sluggish growth in China.

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By :  ,  Financial Analyst

An official gauge of Chinese manufacturing activity – the official purchasing managers' index (PMI) – came in at 50.3 for November, it was revealed today (December 1st). This is below expectations of a reading of 50.6 and down from 50.8 in October.

In addition, the HSBC final PMI reading for November was unchanged from an initial six-month low reading of 50.0, down from 50.4 in October. Output fell to 49.6, which was the worst reading since May.

Growth also fell to 7.3 per cent in the third quarter, which was the slowest pace since the global financial crisis.

Analysts blamed the country's struggling property market, uneven export growth and cooling domestic demand and investment are some of the major factors weighing on overall growth.

Alaistair Chan, economist at Moody's Analytics, said he had expected the slowdown in manufacturing and was a "little more pessimistic" than the market for two reasons.

"Firstly, there are signs the recent export boom is fading. Meanwhile, the housing market and related sectors such as steel and cement manufacturing, remains in a slump," Mr Chan told the BBC.

China's slowing economy spurred the central bank (PBOC) into action last month, easing interest rates for the first time in more than two years.

It said its one year deposit rate would be cut from three per cent to 2.75 per cent in a bid to revive its economy.

"I think the government will continue to loosen monetary policies in the coming months. The economy and the PMI have been hovering around 50 for a long time, so the economy is stuck," independent economist Andy Xie told CNBC following the release of the data.

Asian shares were mostly lower today, with the Australia’s S&P ASX 200 benchmark index closing down two per cent at 5207.70, while the Hang Seng Index lost 2.6 per cent to 23367.45. The Shanghai Composite benchmark closed off 0.1 per cent at 2690.16.

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