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[BEIJING] Confidence among China's sales managers and steel producers waned in November, matching the mood among international investors, while sentiment among small businesses improved, according to the earliest available indicators.
As the country's leaders underline a shift to more sustainable economic growth rates, and push through reforms to cut pollution and curb financial risk, the world's second-largest economy is on a long-term slowdown, even though output in 2017 has exceeded expectations. Economists see gross domestic product expanding 6.8 per cent this year before decelerating to 6.4 per cent in 2018.
The earliest official indicator release for November, manufacturing and non-manufacturing purchasing managers indices, is due on Thursday. Here are what the private indicators that give an earlier look into the economy show.
International financial market specialists are less optimistic. A survey by the China Economic Panel - a joint project of the Centre for European Economic Research (ZEW) in Mannheim, Germany, and Fudan University in Shanghai - showed expectations for the next 12 months dropped to 7.6 this month from 17.3 in October. That's above the long-term average of 5.4.
The construction sector scored much worse than in the previous month, according to the statement. In the long term, the construction sector's slight upward trend will probably remain in place, the panel said.
Sentiment among sales managers eased, according to a survey by London-based World Economics Ltd, as the reading fell to 51.5, the lowest in 13 months. Values above 50 indicate growth.
"The Chinese economy continued to grow in November but at a slower rate," chief executive Ed Jones wrote in a statement. "Panelists have explained that their companies have been lowering capital expenditure, inventories of stock, and limiting their exposure to under-performing accounts to increase their capacity against possible coming risks and future challenges."
The S&P Global Platts China Steel Sentiment Index edged down to 31.93 this month from 33.61 in October. The gauge is based on a survey between 75 and 90 China-based market participants including traders and steel mills.
"China's steel market is still coming to terms with the likely impact of winter production cuts on demand and prices," Paul Bartholomew, a senior managing editor at S&P in Melbourne, wrote in a report.
"As well as lower output, construction activity will also slow for environmental reasons, so both supply and demand will be affected."
Chinese mills and plants are in a sweet spot this year. Industrial profits increased 25.1 per cent in October from a year earlier, compared with a 27.7 per cent pace a month earlier that was the highest in almost six years, the National Bureau of Statistics said Monday.
Standard Chartered plc's Small and Medium Enterprise Confidence Index picked up to 56.1 this month from 55.2 in October, the bank's survey of more than 500 companies shows.
"Current performance of sales and production stays resilient, while the outlook for both eases," Standard Chartered economists Shen Lan and Ding Shuang wrote in the report. The central bank's targeted reserve-requirement ratio cut, which is to be implemented in 2018, will prompt banks to increase credit allocation to the smaller firms, the economists wrote.
Manufacturing was little changed from last month, according to the China Satellite Manufacturing Index, which remained unchanged at 51.08. The gauge published by San Francisco-based SpaceKnow Inc tracks commercial satellite imagery to gauge activity levels across thousands of industrial sites.