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Published: Tue, January 03, 2017
Economy | By Melissa Porter

Demonetisation takes toll on manufacturing, PMI falls below 50

Demonetisation takes toll on manufacturing, PMI falls below 50

The official purchasing managers' index slipped from 51.7 in November to 51.4 last month, compared to forecasts in a Reuters poll of a figure of 51.5.

China's manufacturing PMI fell to 51.4 in December from 51.7 in November. Data suggested that government measures to rein in soaring asset prices are starting to have a knock-on effect on the broader economy.

Despite the slight decline in December, the latest data reaffirmed the momentum for a stabilizing Chinese economy, said Zhang Liqun, a researcher with the Development Research Center under the State Council.

According to the Nikkei Markit India Manufacturing Purchasing Managers' Index (PMI) a composite indicator of manufacturing performance the withdrawal of high-value banknotes has reportedly hit new business orders and factory output in December, with companies signalling fewer amounts of new orders, buying levels and output.

China's manufacturing sector continued to remain in expansion for a fifth consecutive month in December, but growth slowed slightly more than expected.

The sub-index for new orders stayed at the same level as the previous month, the highest point this year.

Last month saw PMI - based on data collected December 6-15 from purchasing executives in over 400 industrial companies - at 55.7, compared to November's 56.3, reflecting "another solid expansion in the Filipino manufacturing industry", according to a report e-mailed to media yesterday.

China is counting on growth in services to offset persistent weakness in exports that is dragging on the world's second-largest economy. GDP in the third quarter was down 2.0 percent on quarter and up 1.1 percent on year.

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