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The bank’s flash purchasing managers’ index for the country’s manufacturing sector stood at 50 points for this month, down from a final reading of 50.4 points in October, it announced on Thursday November 20.
The figure is a six-month low, and is also below the 50.2 points widely expected in the market.
“New export order growth continued to ease […] disinflationary pressures remain strong and the labour market showed further signs of weakening. Weak price pressures and low capacity utilisation point to insufficient demand in the economy,” Qu Hongbin, HSBC China’s chief economist, said.
Growth continues to face significant downward pressures, and more monetary and fiscal easing measures should be deployed, as there are still uncertainties in the months ahead from the property market and on the export front, he said.
The weaker PMI could further dampen sentiment in the country’s steel market, and prices are unlikely to rebound in the short term due to a lack of upward momentum, a Jiangsu-based analyst told Steel First.
“It seems that there is no positive factor to support the market at all. Iron ore prices keep falling, export business stagnates during the slow winter season, and domestic demand remains sluggish amid the economic slowdown,” she said.
Metal Bulletin’s index for 62% Fe seaborne iron ore plunged further to a five-year low of $70.20 per tonne cfr Qingdao on Wednesday November 19.
HSBC expects China’s manufacturing activity to plateau in November amid sluggish economic growth and an uncertain market.