Chinese Industry Slumps as PMI Hits Record Low

The downturn in China's manufacturing sector gathered pace last month as falls in new orders and production drove the official purchasing managers' index (PMI) to a record low.

CNBC.com

The index, which is based on a survey of industrial firms across China, fell to 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing (CFLP) said on Monday.

The index is designed to give a timely snapshot of the state of the manufacturing sector, which has been a major driver of China's headlong economic growth in recent years.

A reading over 50 indicates an expansion of activity in the manufacturing sector, while one below 50 suggests a
deterioration.

"November's PMI shows that the Chinese economy is slowing down at an accelerating rate. The signs of economic contraction are more evident," said Zhang Liqun, a government economist who comments on the survey for the logistics federation.

Zhang said the government had taken many aggressive steps to counter the slowdown, but these would take time to have an impact.

"China's economy will bounce back to a comparatively high growth rate in the spring of 2009 as the effects of the various measures show through," he added.

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