Asian manufacturing weakens in November

In China, the world’s second-largest economy and biggest exporter, manufacturing activity fell for the first time in 33 months, official data showed

Manufacturing activity across Asia weakened in November as the worsening economic crises in Europe and the United States sapped demand for the export-driven region’s shipments, data showed yesterday.
Exports are the growth engine for many Asian economies, including China, and a deterioration in the sector will fuel concerns about their ability to support the global economy and prevent another recession.
In China, the world’s second-largest economy and biggest exporter, manufacturing activity fell for the first time in 33 months, official data showed, vindicating the government’s move on Wednesday to ease monetary policy.
The purchasing managers index (PMI) fell to 49 last month, down 1.4 points from October, marking the first contraction since February 2009, the China Federation of Logistics and Purchasing said in a statement.
British banking giant HSBC said its China manufacturing activity index also fell to a 32-month low of 47.7 in November from 51 in October, signalling a “solid deterioration” in the sector.
A reading above 50 indicates the sector is expanding while a reading below 50 suggests a contraction.
“The region’s more export-oriented economies all appear to be struggling at the moment,” said Mark Williams, an economist at Capital Economics in London.
India’s manufacturing activity slowed to 51 in November from 52 in October, hurt by weak new order growth amid persistent uncertainty over global economic conditions, Dow Jones Newswires reported, citing HSBC data.
Activity in South Korean factories contracted for the fourth month in a row in November and at a faster pace than in October, with the HSBC index falling to 47.1 from 48.0.
Taiwan’s manufacturing sector also continued to soften in November, with the HSBC PMI at 43.9 compared with 43.7 in October.
Australian manufacturing activity declined, though at a slightly slower pace, rising to 47.8 in November from 47.4 in October, according to the Australian Industry Group/PricewaterhouseCoopers manufacturing index.
Signs of weakness in China’s manufacturing sector is a major headache for trade partners and policymakers, who have moved to free up liquidity in the economy.
On Wednesday the People’s Bank of China cut bank reserve levels for the first time since 2008 to help boost lending and spur growth, and counter alarming signs of a domestic slowdown and the crisis in key export markets.
Analysts had forecast such a move after authorities said recently they would “fine-tune” monetary policy amid growing concerns that the weak global economy is increasing the risk of a sharp slowdown in China.
“The message is clear: the economy is slowing much faster than expected and the government has stepped into the ring. The loosening campaign has begun,” said Alistair Thornton, an analyst at IHS Global Insight in Beijing.
“We expect this to feed through into slower industrial production growth numbers for November, and slower gross domestic product numbers for the fourth quarter.”
The move to boost lending, which analysts estimate unlocked 350 billion yuan (about USD 55 billion) in liquidity, is the strongest signal yet that Beijing wants to ease tight credit restrictions put in place to curb surging inflation and property prices – now showing signs of easing.

AFP