Manufacturing PMI set to hit 15-month low
Print Edition
CHINA’S manufacturing activity may hit a 15-month low in July with fewer new orders and lower production, dealing another blow to efforts to revive the economy, a survey showed yesterday.
The Caixin Flash China General Manufacturing Purchasing Managers’ Index, formerly the HSBC PMI and the earliest available indicator of China’s industrial sector, retreated to 48.2 in July from the final reading of 49.4 in June, according to Caixin Magazine and research firm Markit.
The reading was below the demarcation line of 50 and pointed to contracting activities for the fifth consecutive month after a brief rebound in February.
The components showed that manufacturing output landed at 47.3 in July — a 16-month low and down from 49.7 a month earlier. New orders and new export orders grew in June, but dropped in July. The only positive spot was employment, which decreased at a slower pace.
Qu Hongbin, chief economist for China at HSBC, said the data indicated that the foundation for the economic recovery was not stable and that there were difficulties still in the manufacturing sector.
China’s economic performance surprised the market by rendering a 7-percent increase in the second quarter, versus the previous market expectation of a 6.8-percent rise that was below the full-year target of 7 percent.
Meanwhile, trade, industrial production and retail sales all improved in June, while the housing market also rebounded, giving hope of a long-awaited recovery in the world’s second-largest economy.
Industrial production in June expanded 6.8 percent from a year earlier, much stronger than the pace of 6.1 percent in May and extending a faster growth for the third straight month.
“There is no room for economic complacency as headwinds from sluggish exports and heavy industry growth remain acute,” said Li Wei, an economist at Commonwealth Bank of Australia.
To buttress the economy and prevent a rout in the stock market, China has been issuing pragmatic policy measures. It has already cut interest rates and reserve requirement ratio to bolster market liquidity, while speeding up various projects.
The official Purchasing Managers’ Index, a similar gauge compiled by the National Bureau of Statistics and slated toward state-owned manufacturers, landed at 50.2 in June, the same as that in May.
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