China’s Manufacturing May Contract a Second Month, Preliminary PMI Shows

China’s manufacturing may contract for a second month in December as Europe’s debt crisis weighs on exports and home sales slide, preliminary results from a survey indicate.

The reading of 49 for a purchasing managers’ index reported by HSBC Holdings Plc and Markit Economics today compares with a final number of 47.7 for November. The dividing line between contraction and expansion is 50.

China’s money-supply expanded by the least in a decade in November and Communist Party leaders yesterday described the global outlook as “very grim,” underscoring the case for monetary and fiscal easing to support growth. The central bank announced a cut in lenders’ reserve requirements on Nov. 30, the day before the HSBC PMI indicated the nation’s biggest contraction in manufacturing since March 2009.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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