China’s manufacturing contracted for a fifth month in December as recessions in the U.S., Europe and Japan sapped demand for exports, a survey showed.
The CLSA China Purchasing Managers’ Index stood at a seasonally adjusted 41.2, compared with a record low of 40.9 in November, CLSA Asia-Pacific Markets said today in an e-mailed statement. A reading below 50 reflects a contraction.
Manufacturers in industries from metals to toys are reducing production or closing down. Aluminum Corp. of China Ltd., the nation’s biggest maker of the metal, and Yunnan Tin Co., the world’s largest producer of tin, cut output as prices fell.
“Chinese manufacturing was very weak in December,” said Eric Fishwick, head of economic research at CLSA in Singapore. “With five back-to-back PMIs signaling contraction, the manufacturing sector, which accounts for 43 percent of the Chinese economy, is close to technical recession.”
The output index fell to a record low of 38.6 last month from 39.2 in November, while the measure of new orders rose to 37 from 36.1. The index of export orders jumped to 33.6 from 28.2, CLSA said.
“Chinese manufacturers reduced the size of their workforces at the fastest rate recorded by the series to date,” today’s report said. An employment index tracked by CLSA has contracted for five consecutive months to 45.2 in December.
China’s economic growth may have slipped to 5.5 percent last quarter, the weakest pace in at least 15 years, according to Shanghai-based Industrial Bank Co.
Exports fell for the first time in seven years in November, imports plunged and industrial output grew at the slowest pace in almost a decade. The government has responded to the deepening slowdown with the stimulus package running through 2010, interest-rate cuts and reductions in export taxes.
I am skeptical of reports that have Chinese GDP growing at 5.5% or higher with this carnage in manufacturing and exports (Mish's comment)
