Chinese manufacturing activity fell in November as the Purchasing Managers’ Index (PMI), an important parameter to judge the performance of manufacturing sector, fell to 49 in November compared to 51.4 in the previous month of October, as per the data released by the China Federation of Logistics and Purchasing. Any reading lower than 50 indicates contraction.
The drop in manufacturing activity was mainly due to lower export demand from the western developed nations amid the current global slowdown and the euro zone debt crisis. China’s tight monetary policy has also affected the manufacturing activity in recent times and was an important reason for the drop. China’s central bank has announced to lower the banks’ reserve requirement by 50 bps in order to boost growth and industrial activity.