HONG KONG – Manufacturing activity in China fell to a six-month low in November, reflecting sluggishness in the world No. 2 economy and weakness abroad, according to an early survey of factory conditions released Thursday.
HSBC’s preliminary purchasing managers’ index fell to 50.0 this month from 50.4 in October. The index uses a 100-point scale on which numbers below 50 indicate contraction while numbers above show expansion. The latest reading indicates there’s no change in overall conditions from the previous month.
It’s the latest sign that China’s economy continues to struggle after growth in the third quarter slowed to a five-year low of 7.3 per cent. China’s slowdown also compounds challenges faced by the global economy as it struggles to mount a convincing recovery.
Factory output declined for the first time in half a year, falling to a seven-month low, according to the HSBC report, compiled with Markit. The new export orders subindex also slipped into contraction for the first time since May, indicating slack demand from customers in overseas markets.
“Weak price pressures and low capacity utilization point to insufficient demand in the economy,” Chief China Economist Qu Hongbin said. “Furthermore, we still see uncertainties in the months ahead from the property market and on the export front.”
The survey comes days after an official report showed that property prices softened in October in all but one of 70 cities tracked across China, falling 2.6 per cent overall.
Real estate had been a prime driver of China’s blistering economic growth in previous years but recent weakness in prices suggests economic growth will continue to slip. Part of the fall in prices is due to government measures to prevent a property bubble and keep housing affordable.