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ECONOMY
Weekly Watch> WEEKLY WATCH NO. 45, 2011> ECONOMY
UPDATED: November 4, 2011 NO. 45 NOVEMBER 10, 2011
Manufacturing Gloom
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The purchasing managers index (PMI), a barometer of manufacturing activities, stood at 50.4 percent in October, down 0.8 percentage points from September, said the China Federation of Logistics and Purchasing (CFLP).

The figure is approaching the boom-andbust line of 50 percent and is also the lowest since March 2009.

The new orders sub-index, an effective gauge of domestic demand, stood at 50.5 percent in September, compared with 51.3 percent of last month. The input prices subindex, a measure of how much factories pay for raw materials and other intermediary goods, dropped sharply to 46.2 percent, down 10.4 percentage points from September.

"The index signals a darkening prospect for the broader economy," said Zhang Liqun, a researcher with the Development Research Center of the State Council. "Export and investments are expected to taper off in the rest of the year while enterprises continue the process of destocking."

Given a stalling growth engine at home, speculation abounds that Chinese policymakers will ease the monetary stance in case of sapping growth momentum too much.

"China may be ready to further fine-tune its policies and roll out more pro-growth measures," said Lu Ting, a Hong Kongbased economist with Bank of America Merrill Lynch. "Challenges facing the government include tight credit, falling export growth, inflation and falling home sales."



 
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