China's manufacturing sector slowed for the first time in four months in November, impacted by sluggish new export orders, and suggesting the third-quarter rebound in the world's second-largest economy may be losing steam just as the country is starting to implement the broadest policy reforms since the 1990s.

The HSBC preliminary Purchasing Managers' Index fell to 50.4 in November from 50.9 in October, HSBC Holdings Plc said on Thursday. It remains in positive territory but just above the 50-mark that separates expansion from contraction compared with the previous month.

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.

Hongbin Qu, chief economist, China & Co- Head of Asian Economic Research at HSBC said: “China’s growth momentum softened a little in November, as the HSBC Flash China Manufacturing PMI moderated due to the weak new export orders and slowing pace of restocking activities. That said, this is still the second-highest PMI reading in seven months. The muted inflationary pressures should enable Beijing to keep policy relatively accommodative to support growth.”

The HSBC China Report on Manufacturing is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 420 manufacturing companies.

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