Manufacturing in China contracted in November by its largest margin since records began, exacerbating fears that deteriorating exports may hit the economy harder than originally thought, Bloomberg reported. The purchasing managers’ index (PMI) fell to a seasonally adjusted 38.8 in November from 44.6 in October, according to the China Federation of Logistics and Purchasing. The index – which is based on a survey of more than 700 companies in 20 industries, including energy, metallurgy, textile, automobile and electronics – is seen as a leading indicator of factory activity. A reading above 50 reflects an expansion, below 50 a contraction. China’s economy expanded 9% year-on-year in the third quarter of 2008, its slowest pace in five years. J.P. Morgan predicts growth could slow to 4% in the fourth quarter.
For more on the challenges facing China’s manufacturing sector, read this article from the December issue of CER.