- Andrew Polk, economist at the Conference Board
Activity growth in China's manufacturing sector slowed in October, despite a streak of government's incentives aimed at bolstering growth, indicating that more support will be needed to underpin the world's second largest economy. Disappointing data release kicked off the final quarter of the year on an unexpectedly weak note and revealed specific problems among smaller and midsize companies. China's official Manufacturing Purchasing Managers' Index declined to 50.8 in October compared with September's gauge of 51.1, the China Federation of Logistics and Purchasing reported. The reading remained slightly above the 50-mark threshold, which separates expansion from contraction.
China's economic growth has been weak this year, dragged down by a weak property sector and tight credit conditions. Currently, the government's ability to reach its goal of 7.5% growth rate this year is questioned. Growth slid to an annual 7.3% in the third quarter down from 7.5% in the April-June quarter and 7.7% for all of last year. The third quarter pace was the slowest since the first quarter of 2009. There is speculation the Chinese government may deploy further steps to boost growth. So far the government has used a variety of measures to give the economy a helping hand, by stimulating consumer spending. It has reduced taxes and fees and tried to cut red tape.
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