Overall Chinese business conditions remain positive but results for the main indexes in the November Xinhua Finance/MNI China Business Sentiment Survey show conditions deteriorating across the board.

The growth of new orders has slowed to its lowest level ever, with production and corporate financial positions declining to record lowsl. Most of the indexes remain in positive territory but indicate that growth has slowed considerably since the booming conditions reflected in the survey earlier this year.

The overall business sentiment index for current conditions stood at 63.85 in November, the lowest result ever in the survey which began in Jaunary 2005. That result was down from 64.58 in October and from 75.67 in November last year.

The index was above 80 in the first three months of this year.

The index for new orders fell sharply to 60.36 in November, also its lowest level ever, from 73.39 in the previous month and 71.48 a year ago.

The financial position index fell to the lowest level in survey history at 60.00, down from 63.64 in the previous month and 71.72 for the same month in 2006.

Logan Wright, China analyst for Stone and McCarthy Research Associates, said, ‘A combination of cost pressures have been building throughout this year, in the form of higher input prices, higher interest rates, faster yuan appreciation, and declining sales prices; these effects are depressing both corporate financial positions and overall sentiment.’

The survey results suggest Chinese companies still expect better times ahead, with the indexes showing expectations for conditions in three months outperforming the current indexes in most categories, and with some improving from the previous months’ survey. Our illustration is of a low pressure system. Seemed appropriate.
Source: Forbes