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China's official PMI seen edging down to 50.6 in November

Published 27/11/2014, 10:34
© Reuters. A worker wearing protective glasses welds steel products at a heavy equipment manufacturing factory in Luoyang
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BEIJING (Reuters) - Growth in China's manufacturing sector likely slowed slightly in November as demand remained sluggish, a Reuters poll showed.

The median forecast from 12 economists in the poll was that the official manufacturing Purchasing Managers' Index (PMI) for November will be 50.6, slightly lower than October's 50.8.

The survey will be released on Monday.

A reading above 50-point level indicates an expansion in activity while one below that points to a contraction on a monthly basis.

If the survey shows a slower pace of expansion in November, that may keep investors worried that the Chinese economy, which has stumbled this year, may not recover soon.

Industrial Bank Co. Ltd, in a research note, said consumption only showed good signs at an online "singles' day" promotion by Alibaba Group Holding on Nov. 11 and steel production fell nearly 10 percent this month as mills near Beijing halted operations for the Asia-Pacific Economic Cooperation (APEC) summit.

Hurt by unsteady exports, a housing downturn and cooling investment growth, the Chinese economy is in danger of missing the government's growth target of about 7.5 percent this year. Third-quarter growth of 7.3 percent was the weakest since the global financial crisis.

China cut interest rates unexpectedly on Nov. 21, stepping up efforts to support the world's second-biggest economy as it heads towards its slowest expansion in nearly a quarter of a century, saddled under a mountain of debt.

"I don't think the interest rate cut will have a huge impact on the real economy. The biggest problems are still weak demand and tight credit," said Zhou Hao, ANZ economist in Shanghai.

A preliminary PMI survey released last week by HSBC/Markit showed the manufacturing sector stalled in November, with output contracting for the first time in six months.

© Reuters. A worker wearing protective glasses welds steel products at a heavy equipment manufacturing factory in Luoyang

The official PMI is focused on larger, state-owned factories, as opposed to the HSBC/Markit PMI which focuses more on smaller manufacturers in the private sector.

(Reporting by Judy Hua, Shao Xiaoyi and Koh Gui Qing in BEIJING and Polling team in BANGALORE; Editing by Richard Borsuk)

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