(Adds details)
By Simon Rabinovitch
BEIJING, Nov 1 (Reuters) - China's manufacturing sector contracted sharply in October according to an official monthly survey, providing evidence that the global financial crisis has exacted a heavy price on the once roaring Chinese economy.
The purchasing managers' index fell to 44.6 percent, the lowest since the China Federation of Logistics and Purchasing began to compile it in January 2005, the CFLP said on Saturday.
A reading below 50 indicates contraction, while one above 50 suggests expansion.
The index had crept above that boom-bust line in September, but the fall back below it means that China's manufacturing sector has been shrinking for three of the past four months, according to the official survey.
Zhang Liqun, an economist with the Development Research Centre, a think-tank that reports to China's cabinet, noted that some people had previously attributed the slowdown to disruptions from Beijing's hosting of the Summer Olympics.
"But from the change to October's PMI, we can see that the the growth slowdown in the third quarter was not mainly because of the Olympic impact," he said.
"Rather, it was the result of policy controls and changes in the external environment. Because of this, we can see that China's economy has already entered the process of slowing down," he said.
Almost all key sub-indexes, from the measure for output to that for new export orders, fell precipitately. The only to rise was the gauge for stocks of finished goods, hardly a good sign for the manufacturing sector that has been a driver of the Chinese economy.
If there was a silver lining, it was that the sub-index for input prices fell most steeply, showing that pipeline inflationary pressures were no longer the worry for China that they were at the start of the year.
China's economy slowed to annual growth of 9.0 percent in the third quarter, well down from a scorching pace of 11.9 percent last year, putting it on track for its first year of single-digit expansion since 2002.
Concerned by the abrupt turn of fortunes, Beijing has made a series of moves in recent weeks to prop up demand, from cutting interest rates three times to investing massively in public projects and increasing tax rebates for exporters.
Zhang expressed confidence that these steps would cushion China from the slowdown sweeping the world economy in the wake of the worst financial crisis in 80 years.
"The task of defending growth has become a bigger priority by the day and policy adjustments have been very concentrated," he said.
"On this basis, I forecast that the Chinese economy won't experience a deep slowdown and that it will instead gradually stabilise in the future."
Following is a breakdown of the purchasing managers' index:
Oct Sep Aug Jul Jun May Overall PMI 44.6 51.2 48.4 48.4 52.0 53.3 Output 44.3 54.6 48.7 47.4 54.2 55.7 New orders 41.7 51.3 46.0 46.2 52.6 55.4 New export orders 41.4 48.8 48.4 46.7 50.2 53.4 Backlogs of orders 40.7 47.3 45.4 ~ 47.1 49.3 Stocks of finished goods 51.4 50.5 49.0 ~ 49.5 48.7 Quantity of purchases 42.4 50.8 46.8 47.1 53.5 53.7 Imports 39.4 46.4 45.3 ~ 50.9 50.3 Input prices 32.3 44.7 57.8 71.3 75.7 73.9 Stocks of purchases 42.6 47.5 46.8 ~ 47.8 48.1 Employment 47.0 50.3 50.7 ~ 50.3 51.2 Suppliers' delivery times 50.8 50.8 49.5 ~ 47.8 48.8 ~ Not available (Reporting by Simon Rabinovitch; Editing by Kim Coghill)