Growth in Chinese factories stalled in November as output shrank for the first time in six months, reinforcing expectations that authorities will roll out more aggressive stimulus measures after unexpectedly cutting interest rates to shore up growth.
The final HSBC/Markit China Manufacturing Purchasing Managers’ Index (PMI) edged down to 50.0 in November, a six-month low and right on the boom-bust level that separates growth from contraction on a monthly basis.
The reading was unchanged from a preliminary “flash” finding and down from a final 50.4 in October.
Output fell to 49.6, the worst reading since May, as companies scaled back production in the face of “muted growth in new work” and subdued market conditions, HSBC/Markit said on Monday.
Hurt by a sagging property market, unsteady export growth and cooling domestic demand and investment, China’s economic growth is expected to slow to a 24-year low of 7.4% this year, though the fourth quarter is shaping up to be possibly weaker than earlier thought.
After months of sticking to more modest stimulus measures, China surprised global financial markets by cutting interest rates on Nov. 21 to spur activity and help bring down financing costs for cash-starved companies which are struggling to pay off mountains of debt.