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ECONOMY
Weekly Watch> WEEKLY WATCH NO. 49, 2011> ECONOMY
UPDATED: December 2, 2011 NO. 49 DECEMBER 8, 2011
Manufacturing Slump
Share

The purchasing managers index (PMI), a barometer of manufacturing activities, stood at 49 percent in November, down 1.4 percentage points from October, said the China Federation of Logistics and Purchasing (CFLP).

This is the first time that the figure has dropped below the boom-and-bust line of 50 percent in 33 months. A reading below 50 percent indicates economic contraction.

"The index shows the Chinese economy will continue slowing down in the near future," said Zhang Liqun, a researcher with the Development Research Center of the State Council. "Enterprises will face daunting challenges of tepid market demand."

"But a hard landing is less likely given robust investments and solid consumption growth," he added.

Inflation is likely to decelerate faster than expected, leaving room for China to step up selective easing measures, which should filter through to keep China on track for a soft landing, said Qu Hongbin, chief China economist with the HSBC.

The new orders sub-index, an effective gauge of domestic demand, stood at 47.8 percent in November, diving from 50.5 percent last month. The input prices sub-index, a measure of how much factories pay for raw materials and other intermediary goods, dropped sharply to 44.4 percent, down 1.8 percentage points from October.



 
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