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China factory activity at six-month low

HONG KONG — Manufacturing activity in China fell to a six-month low in November, reflecting sluggishness in the world No 2 economy and weakness abroad, showed an early survey of factory conditions released yesterday.

HONG KONG — Manufacturing activity in China fell to a six-month low in November, reflecting sluggishness in the world No 2 economy and weakness abroad, showed an early survey of factory conditions released yesterday.

HSBC’s preliminary purchasing managers’ index fell to 50.0 this month from 50.4 in October. Numbers above 50 indicate expansion. It is the latest sign that China’s economy continues to struggle after growth in the third quarter slowed to a five-year low of 7.3 per cent, strengthening the case for more stimulus to avert a sharper slowdown.

Hurt by a cooling property sector, erratic foreign demand and slackening domestic investment growth, China’s economy is seen posting its weakest annual growth in 24 years this year at 7.4 per cent.

Factory output declined for the first time in half a year, falling to a seven-month low, said the HSBC report, compiled with Markit. The new export orders subindex also slipped into contraction for the first time since May, indicating slack demand from customers in overseas markets.

“Weak price pressures and low capacity utilisation point to insufficient demand in the economy,” HSBC chief China economist Qu Hongbin said. “Furthermore, we still see uncertainties in the months ahead from the property market and on the export front.”’

To re-energise the economy, the government has rolled out a steady stream of stimulus since April that has put a floor beneath flagging growth. The ailing property market, for example, is showing some tentative signs of possibly bottoming out, though it may remain weak well into 2015.

“We are still expecting 7.1 per cent growth for the fourth quarter,” said Citi economist Shen Minggao.

“The economy is still under downward pressure and we expect three rate cuts from now until the middle of next year,” said Mr Shen, who expects interest rates to be cut by 25 basis points each time. Agencies

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