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People's Daily Online>>China Business

Decline in orders slows China's manufacturers

By Wang Yanlin (Xinhua)

15:21, December 02, 2011

China's manufacturing activities contracted for the first time in almost three years last month due to dismal external demand, rising production costs and strict limits on money available for small firms.

The official Purchasing Managers' Index, which measures manufacturing activity, slipped from October's 50.4 to 49 in November, the lowest since March 2009, the China Federation of Logistics and Purchasing said yesterday.

A reading below 50 indicates contraction.

The federation said the drop was led by declines in new orders and new export orders. The new export orders index fell to 45.6 from 48.6 in October, dragging the new orders index down to 47.8 from 50.5.

In addition, most producers of raw materials and downstream products reported contraction, while consumer goods manufacturers said conditions improved.

"It indicates the influence of rising production costs, which more affects producers of lower stream producers," the federation said.

Chang Jian, an economist at Barclays Capital, said the reading indicated a potential sharp slowdown in the first quarter of next year.

"It highlights rapidly slowing external demand," Chang said. "For now, we continue to expect a soft landing in China. However, people should be mindful of downside risks from a global recession and the domestic property market."

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