China November industry output shrinks; PMI falls below 50%

SHANGHAI (ICIS)--China’s purchasing managers’ index (PMI) in November declined by 1.4 percentage points to 49.0% from October, indicating a contraction in manufacturing output for the first time in 32 months, official data showed on Thursday.

The PMI reading of the world’s second biggest economy was last seen in a contraction mode, with a reading below 50%, in March 2009.

Data from the China Federation of Logistics and Purchasing (CFLP) showed that the country’s barometer of manufacturing activities had continuously fallen from April to July. The PMI reading rebounded in August and September, before resuming falls in October.

The monthly declines in PMI indicate that the country's economic momentum is slowing down, said Zhang Liqun, an analyst at CFLP.

Under the November PMI, new orders index fell by 2.7 percentage points from October to 47.8%, while production index dropped by 1.4 percentage points to 50.9% in November, according to the official data.

China’s import index in the PMI last month increased 0.3 percentage points to 47.3%, while export index fell 3.0 percentage points to 45.6%, the data showed.

China remains as a leading importer of global products while demand from economies in the West is in doldrums because of the eurozone debt crisis, said an analyst from brokerage Xingye Securities who declined to be named.

Purchasing index in November also declined 1.8 percentage points from October to 44.4%, CFLP data showed.

These numbers also indicated a weakening of domestic demand and business enterprises may be faced with shortage of orders this month to early next year, said Zhang.

The PMI, which is a measurement of the monthly performance of China’s factories, is based on a survey of 820 manufacturers across 20 industries. A figure above 50% indicates an expansion, while a figure below 50% means a contraction.