2017.12.0100:40:00UTC+00China's Factory Growth Weakest In 5 Months

China's factory activity expanded at the weakest pace in five months in November as subdued growth in new orders and a substantial fall in employment coincided with a decline in business sentiment, survey results from IHS Markit showed Friday.

The Caixin Purchasing Managers' Index dropped to 50.8 in November from 51.0 in October. The expected reading was 50.9.

Although the index remained above the crucial 50.0 value, the index dipped to its lowest level for five months to signal only a marginal upturn in operating conditions.

However, according to official survey published by the National Bureau of Statistics, the factory PMI rose to 51.8 in November from 51.6 in October. Similarly, the non-manufacturing PMI came in at 54.8, up from 54.3 a month ago.

In the fourth quarter, the economy is likely to maintain the stability observed since the start of the second half of the year, Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said.

"Economic growth in 2017 is expected to be higher than last year, but it may come under downward pressure in 2018."

Julian Evans-Pritchard, an economist at Capital Economics, said he expects growth momentum to weaken further in the coming months as the drags from slower credit growth, reduced fiscal support and the environmental crackdown all intensify.

Although goods producers continued to increase their production levels in October, the rate of growth was moderate overall, survey results from Markit showed.

Total new orders climbed at a similarly moderate pace in November. Companies cited greater client bases and the launch of new products for higher demand.

As has been the case in each month since November 2013, staff numbers at Chinese manufacturers declined in November. The rate of job shedding was the fastest seen in three months.

Reflective of marginal growth in production, firms raised their buying activity slightly in November.

Difficulties in obtaining inputs alongside higher raw material prices in international markets underpinned a further sharp rise in input costs faced by Chinese manufacturers.

Consequently, companies raised their prices charged at a solid pace. Relatively muted growth in new work coincided with weaker optimism towards the 12-month outlook for production. Notably, the degree of positive sentiment was the joint-weakest seen since the series began in April 2012.