Purchasing index drops to record low
December 1, 2008 · Print This Article
Manufacturing Purchasing Managers’ Index is important in a sense that it is a gauge indicating overall conditions of manufacturing. According to Shanghai Daily Newspaper, the China Index fell to a record low in November, here is the news :
PURCHASING INDEX DROPS TO RECORD LOW
Shanghai Daily by Wang Yanlin
The China Manufacturing PMI dropped to 40.9 points last month, down from 45.2 in October and 47.7 in September, said CLSA Asia Pacific Markets today.
Any reading below 50 indicates a contraction. The index has fallen four straight months.
“Production contracted at the sharpest rate in the survey’s history during November. Firms generally attributed the latest fall to a drop in orders, reflecting fears of a protracted economic downturn and uncertainty in financial markets,” said the CLSA report.
Peng Ken, a Citigroup economist, said the weakness in the PMI pointed to further declines in industrial production.
“Likely in response to the PMI figures, the central bank raised the reference exchange rate to the highest in more than three years today,” said Peng. “This would fuel further speculation in a bigger depreciation in the yuan.”
China’s manufacturing sector faces sagging external demand. China’s export growth fell below 20 percent in October after traditional trading partners slashed shipments amid the global financial crisis.
Economists predicted sharper declines of overseas sales would follow as the crisis was spreading to the real economy.
The World Bank said China’s gross domestic product may ease to 7.5 percent, the slowest since 1990, next year.
China announced massive fiscal stimulus packages and sharp interest rate cuts last month to boost consumption and spur growth.
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