Market Commentary and Intraday News

China Manufacturing Growth Slows For Third Month

292 days ago

(RTTNews) - China's manufacturing activity growth eased for the third consecutive month in July, as new orders continued to shrink mainly due to weak global demand, the latest survey results from China Federation of Logistics and Purchasing (CFLP) showed Wednesday.

The headline purchasing managers' index for the manufacturing sector fell to 50.1 in July from 50.2 in June against economists' expectations for an improvement to 50.5. A reading above 50 indicates expansion of the sector, while that below 50 suggests contraction.

The new orders index continued to shrink with the reading falling to 49 in July from 49.2 in the preceding month. The new export orders index was at 46.6, down 0.9 points from a month earlier. The production index fell slightly to 51.8 from 52 in June.

A separate survey by Markit Economics and HSBC continued to show contraction in manufacturing activity in July, albeit at a slower pace. The Markit/HSBC manufacturing PMI was at 49.3 in July, compared to June's reading of 48.2, detailed survey results showed today.

Markit said production in the factory sector increased for the first time in five months in July and the pace of decline in new orders eased. According to the survey, employment contracted at the sharpest pace in 40 months in July.

HSBC Chief Economist Hongbin Qu said, "Final manufacturing PMI confirmed only a modest improvement of manufacturing conditions thanks to the initial effect of the earlier easing measures."

However, this is far from inspiring, as China's growth slowdown has not been reversed meaningfully and downside pressures persist with external markets continuing to deteriorate, Hongbin said.

"We still expect Beijing to step up policy easing in the coming months to support growth and employment," the economist added.

The economy grew 7.6 percent in the second quarter, the weakest pace since the first quarter of 2009. The People's Bank of China cut interest rates in June and July amid significant slowdown in economic activity. The bank has lowered the reserve requirement ratio three times since November 2011.

The International Monetary Fund expects China's economic growth to moderate to around 8 percent this year. The Fund has warned that China faces significant downside risks to its economic outlook, mainly due to weak global economic conditions.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2012 RTTNews.com. All Rights Reserved

View all of today's news »