Activity in China’s vast factory sector grew at a milder pace in November on shrinking new export orders, a preliminary private survey showed on Thursday, bolstering expectations that the economy could lose some vigour in the fourth quarter.
The Flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to 50.4 from October’s final reading of 50.9, but for a fourth consecutive months remained above the 50 line which demarcates expansion of activities from contraction.
“China’s growth momentum softened a little in November, as the HSBC Flash China Manufacturing PMI moderated due to the weak new export orders and slowing pace of restocking activities,” said Hongbin Qu, chief China economist at HSBC. “The muted inflationary pressures should enable Beijing to keep policy relatively accommodative to support growth,” he added.
A sub-index measuring new export orders fell to a three-month low of 49.4 in November from 51.3 in October, reflecting lethargic external demand due to patchy recoveries in developed countries.
Overall new orders also edged down slightly, which could suggest that a revival in domestic demand is not strong enough to offset faltering external orders. Among the 11 sub-indices in the survey, nine pointed to either slower growth or a contraction, including jobs.
China has set an annual economic growth target of 7.5% for this year, which officials and economists have said is achievable, though the economy is firmly on track to post its slowest growth in 23 years.
Many economists said the economy is likely to show a weaker momentum in the final three months of this year after a rebound between July and September, due to slowing credit growth and a fall off in restocking demand.
The final HSBC PMI for November is due on December 2, a day after the release of an official survey.