Growth in China’s manufacturing weakens
Print Edition
CHINA’S manufacturing sector saw growth weaken in August, suggesting that the recovery in the world’s second-biggest economy is faltering again, a survey showed yesterday.
The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of China’s industrial sector, fell to a three-month low of 50.3 in August from the final reading of 51.7 in July, its best performance in 16 months, according to HSBC and research firm Markit.
But the PMI, weighted toward private and export-oriented companies, managed to stay above 50, the dividing line between expansion and contraction.
Qu Hongbin, chief economist for China at HSBC, said both domestic and external new orders rose at slower rates, compared with the previous month.
“The data suggest that the economic recovery is still continuing, but its momentum has slowed again,” Qu said. “Therefore, growth in industrial demand and investment activity will likely stay on relatively subdued.”
The components showed that both new orders and new export orders weakened, though they still remained above 50, while production fell to 51.3 from 52.8, also a three-month low.
Qu said China should maintain accommodative monetary and fiscal policies until a more sustainable rebound is seen in economic activity.
Chang Jian, an economist at Barclays, said as the preliminary reading was much weaker than expected, he predicted two interest rate cuts in the second half to help ease debt burden, support demand and mitigate financial risks.
“We continue to believe that the government faces a trade-off between ‘tolerating lower growth’ and ‘rolling out more stimulus’ amid a property market correction and uncertain external demand,” Chang said.
He forecast August’s official PMI, slanted toward state-owned enterprises, due to be released on September 1 by the National Bureau of Statistics, to ease to 51.2 from 51.7 in July.
The tepid reading and forecasts came amid a mixed showing in China’s economy, with signs for lending, industrial production, retail sales and investment for July all pointing to an unexpected easing, while exports stayed strong.
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