The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI)
04 Jan 2016 02:05GMT
The important China's manufacturing PMI just came out which missed market forecast. Reuters reported China's factory activity contracted for the 10th straight month in December and at a sharper pace than in November, a private survey showed, dampening hopes that the world's second-largest economy will enter 2016 on a more stable footing.
The Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) slipped to 48.2 in December, below market expections of 49.0 and down from November's reading of 48.6. The reading was the lowest since September, remaining well below the 50-point level which demarcates contraction from expansion on a monthly basis.
Weighed down by weak demand at home and abroad, factory overcapacity and cooling investment, China is expected to post its weakest economic growth in 25 years in 2015, with growth seen cooling to around 7% from 7.3% in 2014.
Some market watchers suspect real growth is actually much lower than official data suggest. The government is expected to increase its budget deficit to about 3 percent of gross domestic product in 2016 to help cushion the slowing economy, while the central bank is expected to make further cuts in interest rates and banks' reserve requirement ratios (RRR).
After picking up for the first time in seven months in November, the output sub-index dropped to 48.7, its lowest reading in three months, with anecdotal evidence suggesting firms had cut output due to relatively soft market conditions and weaker demand from clients.
As companies cut costs and downsized, employment was also hit, falling to 47.3 in December, the 26th month in a row that manufacturers have shed staff. New export orders contracted after two months of expansion, pointing to a weak start for factories in 2016.
Total new orders shrank for a sixth month, highlighting soft domestic demand as well.
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