Business

China's manufacturing activity contracts at year-end

Factory workers outside of Beijing Image copyright AFP
Image caption A private survey shows China's factory activity contracting in December

China's factory activity is in contraction, based on a private survey, reinforcing calls for more stimulus.

The HSBC/Markit manufacturing purchasing manager's index's initial reading fell to 49.5 in December from November's final reading of 50.

A reading above 50 indicates expansion, while one below 50 points to contraction on a monthly basis.

China will release its official PMI reading for December in the new year.

The state's official PMI came in at 50.3 for November.

This morning's latest reading from HSBC marks a seven-month low.

Qu Hongbin, Chief Economist for China at HSBC said "Domestic demand slowed considerably and fell below 50 for the first time since April 2014. Price indices also fell sharply. The manufacturing slowdown continues in December and points to a weak ending for 2014."

Earlier this week, China's central bank said growth could slow to 7.1% next year from about 7.4% this year, because of a property market slump.

Growth in the world's second largest economy fell to 7.3% in the third quarter, which was the slowest pace since the global financial crisis.

The risk that China might miss its official growth target of 7.5% this year for the first time in 15 years is growing because economic data is weaker than expected, economists said.

A struggling property market, uneven export growth and cooling domestic demand and investment are some of the major factors weighing on overall growth.

Last month the People's Bank of China cut its one year deposit rate to 2.75% from 3.0% to try to revive its economy.

More on this story