Chinese Factories Keep Losing Steam

China’s all-important factory sector is losing steam, with manufacturing activity slumping to a three-year low in November, as concerns grow over the economy.

The official purchasing managers’ index hit 49.6 in November, according to the National Bureau of Statistics, down from 49.8 the previous month. Any number below 50 represents a deceleration in the manufacturing sector.

A separate survey conducted by Chinese media group Caixin showed manufacturing PMI at 48.6 in November, an improvement from 48.3 in October. The index has now been below 50 for nine consecutive months.

The official government manufacturing gauge is heavily weighted toward large enterprises, while the Caixin survey taps a smaller sample size and places greater emphasis on smaller firms.

The data underscores growing worries over the health of China’s economy, the second-largest in the world. Beijing reported last month that gross domestic product slid to 6.9% in the third quarter, the slowest pace since the financial crisis.

Looking ahead, economists surveyed by CNNMoney are expecting 6.8% GDP growth for the year — below the government’s own 7% target. Next year looks even more sluggish at 6.5%.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza