China official factory PMI seen easing in November on weaker demand

BEIJING (Reuters) – China’s manufacturing activity probably grew at a slower pace in November as demand weakened, a Reuters poll showed, reinforcing signs of a modest slowdown in the economy at the year-end as Beijing shifts its focus to market-based reforms.

The official manufacturing purchasing managers’ index (PMI) is forecast to ease to 51.1 in November from an 18-month high of 51.4 in October, according to the median estimate of 13 economists, staying above the 50-point line separating expansion from contraction.

A preliminary PMI survey last week by HSBC and Markit Economics showed that the factory sector grew at a milder pace in November as new export orders shrank. A sub-index measuring new export orders fell to a three-month low.

Most economists expect the economy to lose steam in the final quarter, after a rebound between July and September, because of slowing credit growth and a fall in restocking demand.

China’s exports remain volatile amid a patchy global recovery.

“Activity in the manufacturing sector could weaken in November and December as the current re-stocking cycle draws to an end,” said Luo Wenbo, an economist at Xiangcai Securities in Shanghai

China’s leadership has pledged to push sweeping economic and social reforms in the next decade to unleash fresh growth drivers for the world’s second-largest economy.

Beijing has made it clear that it would accept slower growth while it pushes ahead with reforms to wean the economy away from investment and exports towards domestic consumption, services and innovation.

“Market-oriented reforms will help revitalize the economy fundamentally, but changes will take time,” said Lu Zhengwei, chief economist at Industrial Bank in Shanghai.

A Reuters poll showed annual growth could slow to 7.5 percent in the fourth-quarter of 2013 from 7.8 percent in the previous three months. Full-year growth could be 7.6 percent – the weakest in 14 years – but ahead of the government’s target of 7.5 percent.

The official PMI is weighted more towards bigger and state-owned enterprises and tends to paint a rosier picture than the private survey, which focuses more on smaller firms and those in the private sector.

The official PMI figures will be released on Sunday, December 1 at 9:00 am (0100 GMT). The final HSBC/Markit PMI is due to be published on December 2 at 9:45 am.

(Reporting by Kevin Yao and Jenny Su- Editing by Jacqueline Wong)