Beijing, China (BBN)-Factory activity in the world’s second largest economy, China, deteriorated in November as the manufacturing sector continued to shrink.
The official purchasing managers’ index (PMI) fell below forecasts to 49.6 in November, down from the previous month’s reading of 49.8, reports BBC.
A reading below the 50-mark indicates contraction in the sector, while one above suggests growth.
China’s factories have struggled to gain momentum in a slowing economy.
The Asian giant is headed for its slowest growth in a quarter of a century this year and economists are concerned that it will miss Beijing’s official growth target of 7 per cent.
Activity in its vast manufacturing sector shrank for the fourth consecutive month in November and hit a three-year low.
The government is trying to move China from an export-driven economy to a consumption-based one.
Resilient services sector
Activity in the country’s services sector did pick up last month which helped offset the decline in manufacturing.
The services PMI rose to 53.6 from 53.1 in October.
Bernard Aw, market strategist at trading firm IG, said the improvement in the services PMI had reinforced the view that the sector is “cushioning” growth.
Easing measures by the government may also be supporting growth, according to Julian Evans-Pritchard, China economist at research firm Capital Economics.
“There are some hints that accelerating credit growth and fiscal spending, on the back of recent policy easing, may have continued to support investment growth last month,” he said in a note on Tuesday.
China’s central bank has cut interest rates six times since last November, among a series of other measures to stimulate the economy.
The Caixin/Markit manufacturing PMI contracted for the ninth month in a row in November, but factory activity shrank at a slower pace than the pervious month.
The private PMI survey, which focuses more on small to medium-size businesses, was up to 48.6 in November, from 48.3 in October.
In reaction to the manufacturing data, the Shanghai Composite index was down 0.2 per cent to 3,438.32 points – bucking the higher trend in the rest of Asia.
BBN/SK/AD