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China’s manufacturing activity sees steepest fall in 3 years

File photo shows an automobile production line in China. Based on the latest data, the country’s manufacturing activity has fallen at its fastest rate for more than three years.

China’s manufacturing activity has fallen at its fastest rate for more than three years, underlining weakness in the world's second-largest economy.

According to official data released by the government statistics bureau on Tuesday, the country’s Purchasing Managers' Index (PMI) fell to 49.6 in November.

When it comes to PMI, analysts say, a reading above 50 signals expanding activity while anything below indicates shrinkage, AFP reported.

This is the fourth consecutive month for contraction in China’s economy and is the lowest figure since August 2012, which is just slightly below the economists' expectations.

The statistics bureau blamed the disappointing figure on weak overseas and domestic demand and falling commodity prices, among other factors.

"Facing downward pressures on the economy, companies' buying activities slowed," it said in a statement.

Analysts say since China is the world’s top trader in goods and its manufactured products are sold worldwide, weak production data for the country is seen as not only an indicator of its own growth, but also as showing the state of the global economy.

An unofficial manufacturing survey released on Tuesday by Chinese media group, Caixin, and information provider, Markit, with a greater focus on smaller firms, also pointed to extended contraction in the country’s economy.

The group’s PMI survey for November was 48.6, showing a slight rise from the previous month, which according to the two firms, was fuelled mostly by stabilizing output.

Julian Evans-Pritchard, an analyst with research firm Capital Economics, cited weak overseas demand as a drag on manufacturing, but said services were a bright spot.

"The construction sector PMI rose for the second time last month, following a rebound in fixed investment growth in October," he said.

China's economy expanded 7.3 percent last year, which was the slowest rate for the country since 1990, as traditional growth drivers such as exports and investment increasingly run out of steam.

Chinese officials say the country’s economic growth decelerated to 6.9 percent in the July-September period, its slowest rate since the aftermath of the financial crisis.

Government statistics, however, are widely doubted and many analysts believe the real rate of growth could be several percentage points lower.

Analysts believe that the weak PMI will prompt Beijing to take further loosening measures.

"With soft growth momentum and deflation pressures creeping up, we expect the authorities to further ease monetary policy," economists from Australian bank ANZ said in a note.


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