Chinese Business Sentiment Contracts for the First Time in 4 Months

Talking Points:

• Chinese business sentiment drops to four-month low
• Demand drop outweighing boost from monetary easing
• Outlook weaker despite bets on more stimulus ahead

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Chinese business confidence fell in November, according to MNI. A gauge tracking executives’ assessment of current environment slid to a four-month low of 49.9 from 55.6 in October. This marked the second time that the measure slipped below the “neutral” 50 level this year. The forward-looking expectations index to 51.2 from 58.4 in the prior month.

MNI said “a fall in demand outweighed the positives from cheaper credit and a reported improvement in companies' financial positions.” While firms reported that while monetary easing continues to flow through, the boost in confidence registered on the heels of stimulus expansion appears to have faded.Measures of interest rate expectations have shifted to suggest business leaders expect further accommodation by year-end.

Source: MNI Indicators