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China’s Manufacturing on Verge of ‘Major’ Slowdown, Daiwa Says

Nov. 2 (Bloomberg) -- China’s manufacturing activities may be on the verge of a “major” slowdown, Daiwa Capital Markets said, citing the declines by most components of the official Purchasing Managers Index for October.

The PMI indicates that manufacturers already had a “pessimistic” view of the future, as they reduced employment and raw materials inventories, Daiwa analysts led by Mingchun Sun wrote in a report dated yesterday. Declines in new domestic orders, new export orders and imports suggests both local and external demand will be under “significant” pressure in coming months, they wrote.

“We expect the slowdown to accelerate in the coming months, unless policymakers loosen policy in a timely and decisive manner,” the anlaysts wrote. “We reiterate our view that there is a 25 percent chance of real GDP growth falling below 8.0 percent year-on-year in 4Q11 or 1Q12.”

To contact the editor responsible for this story: Richard Frost at rfrost4@bloomberg.net

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