Published 07-12-2015

CHINESE MANUFACTURING STILL IN DECLINE

04-12-2015

China’s manufacturing sector has declined for the fourth successive month, according to official data.

The official Purchasing Managers' Index (PMI), compiled by the National Bureau of Statistics, was down 0.2 points to 49.6 points. (A reading of less than 50 indicates contraction).

This is the lowest official reading since August 2012.

Both new orders and new export orders fell substantially, reflecting weak demand in both internal and external sectors.

However, another private manufacturing survey by Caixin PMI showed a slight improvement.

While the Caixin PMI also reported its ninth consecutive month of declining activity, the deterioration is the weakest since June.

The Caixin PMI came in at 48.6, up from a reading of 48.3 in October.

Caixin's chief economist He Fan said the result was partly driven by the stabilisation of output volumes, which had been falling for six months.

Staffing levels continued to decline, marking the seventh month of falling employment in China's factories.

The Caixin survey tends to have a stronger focus on small to medium enterprises than the official PMI data.

The worrying news for Australia's resources sector is the factories reported a further fall in input prices on the back of lower raw material costs.

Dr Fan said while overall new business fell modestly, new export work rose at the fastest rate in more than a year.

"This indicates that pressure on economic growth has eased and fiscal policy has had a strong effect," Dr Fan said.

"Overall, the economy is still on track to become more stable."

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