Survey of Chinese firms signals gloomy economic outlook

Channel News Asia
Survey of Chinese firms signals gloomy economic outlook
Posted: 01 December 2008 1746 hrs

BEIJING : China's manufacturing activities hit a three-year low in November, state media reported Monday, as the global credit crisis begins to take hold in Asia's second biggest economy.

The purchasing managers' index (PMI) dropped to 38.8 percent in November, down from 44.6 percent in October and the lowest since the government introduced the survey in 2005, said the Xinhua news agency.

"The data for November showed the overall production activities are contracting sharply," Ma Qing, a Beijing-based analyst with consultancy CEB Monitor Group, told AFP.

He said the survey gives an idea of the general trend of key November data, scheduled to be released over the next couple of weeks.

Zhang Ping, the minister in charge of the National Development and Reform Commission, the nation's top economic planning agency, warned last week that China's economy slowed further last month.

China may be about to experience its worst slowdown in recent memory, with the World Bank warning last week that economic growth in 2009 could hit a 19-year low of 7.5 percent.

The PMI is based on surveys of more than 700 manufacturers for their views on 11 component subindexes including new orders, employment, supply and inventory.

A reading above 50 percent suggests expansion, while anything below 50 percent signals a slowdown.

November's figure was the fourth time within this year that the PMI dropped below 50 percent, Xinhua said.

The PMI is published by the National Bureau of Statistics in cooperation with the China Federation of Logistics and Purchasing.

Investment bank Credit Lyonnais Securities Asia on Monday also released its China PMI report, which covered more than 400 industrial companies.

The report said PMI fell to a new low of 40.9 percent in November, reflecting slowdowns in output, new business and employment.

- AFP/vm