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China official October factory, services surveys show economy still wobbly

  • Tuesday, November 3, 2015
  • Source:ferro-alloys.com

  • Keywords:sluggish demand
[Fellow]Activity in China's manufacturing sector unexpectedly contracted in October for a third straight month, an official survey showed on Sunday, fuelling fears the economy may be cooling further in the fourth quarter despite a raft of stimulus measures. Adding ...

Activity in China's manufacturing sector unexpectedly contracted in October for a third straight month, an official survey showed on Sunday, fuelling fears the economy may be cooling further in the fourth quarter despite a raft of stimulus measures.

Adding to those concerns, China's services sector, which has been one of the few bright spots in the economy, also showed signs of cooling last month, expanding at its slowest pace in nearly seven years.

The official Purchasing Managers' Index (PMI) was at 49.8 in October, the same pace as in previous month and lagging market expectations of 50.0, according to the National Bureau of Statistics(NBS).

The official non-manufacturing PMI fell to 53.1 in October, down from September's 53.4. Though still a fairly solid pace, it was the lowest reading since late 2008 during the global financial crisis, a similar survey showed.

A reading over 50 points suggests an expansion in activity while one below that level points to an contraction on a monthly basis.

China's factories continued to suffer from sluggish demand at home and abroad, which has saddled some firms with enormous amounts of idle capacity and forced them to cut prices, eating into profits.

New factory export orders contracted for a 13th straight month in October, though the sub-index for new orders - a proxy for both domestic and foreign demand - edged up marginally to 50.3, compared with September's 50.2.

Faced with persistently weak demand, factory owners continued to lay off workers and at a slightly faster pace than in September.

Data last week showed China's economy grew 6.9 percent between July and September from a year earlier, dipping below 7 percent for the first time since the global financial crisis, though some market watchers believe current growth is much weaker than government figures suggest.

Chinese leaders have been trying to reassure jittery global markets for months that the economy is under control after a shock devaluation of the yuan and a summer stock market plunge fanned fears of a hard landing.

To shore up growth, the government has cut interest rates six times since November and lowered the amount of cash that banks must hold as reserves four times this year. The latest cut in interest rates and banks' reserve requirement came on Oct 23, and more easing moves are expected in coming months.

Beijing has also quickened spending on infrastructure and eased curbs on the ailing property sector. The latter have helped revive weak home sales and prices but have not yet reversed a sharp decline in property investment.

Many economists had expected economic growth to bottom out in the third quarter, with modest improvement late in the year and in early 2016 as additional stimulus measures gradually take effect.

  • [Editor:Chen Zhen Seng]

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