- CNTV English - CCTV News

Homepage > News > Biz >

Weak world, domestic demand depress PMI

11-24-2011 10:27 BJT

BEIJING - Weaker domestic and foreign demand is chilling the outlook for China's manufacturing sector, which is expected to slow to a 32-month low in November, as indicated by the preliminary HSBC Purchasing Managers' Index (PMI) released on Wednesday.

The PMI dropped to 48 from 51 in October, the sharpest fall since March 2009, indicating gloomy prospects for the world's second-largest economy, said HSBC Holding PLC.

The index is a prediction of activity in the manufacturing sector, published a week ahead of the monthly official data.

A reading below 50 signals contraction, while a number above 50 means expansion.

Qu Hongbin, HSBC chief economist in China, said in a research note that external demand is set to weaken as the contagion of Europe's debt crisis infects more continents.

China is likely to see a decline in new export orders and further reduce manufacturing output in the coming months, he said.

Domestic demand may tend to fall in the final two months of this year, influenced by the cooling of the real estate industry - the largest engine of China's economy, according to Qu.

Demand for building materials, such as steel, cement and glass, as well as in other sectors related to the housing industry, may suffer from a contraction because the real estate market has reached a tipping point, said Zhang Zhiwei, chief China economist at Nomura International (Hong Kong) Ltd.

"It is possible that the housing sector will quickly deteriorate in the coming months," said Zhang, who predicted a reading of 49 in the November official PMI.

The HSBC manufacturing output indicator, a sub-index of the PMI, declined to 46.7 in November, compared with October's 51.4, indicating manufacturers' falling confidence amid a credit squeeze.

Industrial output growth is likely to slow further to 11 percent in the near future, compared with the 13.2 percent gain in October, said Qu.

According to the HSBC report, the sub-index of input prices dropped to 43.2 this month, adding to evidence that inflationary pressure was on a downward track.

In October, the consumer price index, a key indicator of inflation, slid to 5.5 percent from 6.1 percent in September, after July's figure of 6.5 percent posted the fastest gain in 37 months.

"To stabilize economic growth, instead of curbing inflation, will be the top policy concern for the government in 2012. Both fiscal and monetary policies are likely to ease in the next three months to ensure a GDP increase of more than 8 percent next year," Qu said.

Wang Tao, chief economist in China with UBS Securities Co Ltd, didn't expect "too much policy ease", because the slowdown in China's exports and economy has been "gradual".

"The current mode of policy fine-tuning may continue," she said, forecasting more bank lending and increasing fiscal spending.

Wang forecast the credit quota would increase to 8 trillion yuan ($1.26 trillion) in 2012 from about 7.4 trillion yuan this year.

Editor:Zhang Hao |Source: People's Daily

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program