BEIJING: HSBC's China Purchasing Managers' Index fell below the boom-bust line of 50 in July for the first time since the depths of the global downturn in March 2009, according to Reuters on Monday, Aug 2.
The index dropped to 49.4 from 50.4 in June.
The month-on-month deterioration in Chinese manufacturing, which prolongs a cooling trend that set in at the start of 2010, was led by the second successive drop in output and new orders.
The PMI is designed to provide an early indication of conditions in industry. A figure above 50 points to expansion.
The plunge in the index below that threshold suggests that government steps to slow bank lending, fight property speculation and improve energy efficiency are finding their target.
The new orders sub-index fell in July to 47.9, a 16-month low, from 49.7 in June. There was also an outright drop in new export orders.
"However, there is no need to panic because this is just a slowdown, not a meltdown," said Qu Hongbin, chief economist for China at HSBC.
He said continued investment in infrastructure projects already under way, public housing CONSTRUCTION [] and resilient private consumption would fuel economic growth of about 9 percent in the second half of 2010 and in 2011.
The government's own PMI, released on Sunday, fell to a 17-month low of 51.2 in July from 52.1 in June but remained in positive territory.
Markit, the British research firm that conducts a survey from which the index is compiled, highlighted the following findings:
-- The fractional drop in output, which contrasts with near-record growth early in 2010, mainly reflected fewer new orders. Some textile and clothing firms said labour shortages were crimping production.
-- Exactly 23 percent of respondents booked fewer new orders in July than in June. On the export front, those reporting declines cited weakness from the United States and Europe.
-- The rate of finished inventory accumulation was the fastest since the launch of the survey in April 2004; 16 percent of panellists reported a month-on-month rise in stocks.
-- At the same time, companies reduced their pre-production inventories of semi-manufactured goods and raw materials at the quickest pace since April 2009; 19 percent of respondents said their stocks of inputs fell in July from June.
-- Both input and output prices fell further below the neutral mark of 50. Factory gate prices dropped at the steepest rate in 15 months, reflecting stiffer competition and falling raw material prices. A quarter of respondents said their input costs fell on the month, twice as many as those who reported a rise.
-- The lengthening in delivery times was mainly due to a lack of supply at vendors. Transport difficulties were also a factor. - Reuters
The index dropped to 49.4 from 50.4 in June.
The month-on-month deterioration in Chinese manufacturing, which prolongs a cooling trend that set in at the start of 2010, was led by the second successive drop in output and new orders.
The PMI is designed to provide an early indication of conditions in industry. A figure above 50 points to expansion.
The plunge in the index below that threshold suggests that government steps to slow bank lending, fight property speculation and improve energy efficiency are finding their target.
The new orders sub-index fell in July to 47.9, a 16-month low, from 49.7 in June. There was also an outright drop in new export orders.
"However, there is no need to panic because this is just a slowdown, not a meltdown," said Qu Hongbin, chief economist for China at HSBC.
He said continued investment in infrastructure projects already under way, public housing CONSTRUCTION [] and resilient private consumption would fuel economic growth of about 9 percent in the second half of 2010 and in 2011.
The government's own PMI, released on Sunday, fell to a 17-month low of 51.2 in July from 52.1 in June but remained in positive territory.
Markit, the British research firm that conducts a survey from which the index is compiled, highlighted the following findings:
-- The fractional drop in output, which contrasts with near-record growth early in 2010, mainly reflected fewer new orders. Some textile and clothing firms said labour shortages were crimping production.
-- Exactly 23 percent of respondents booked fewer new orders in July than in June. On the export front, those reporting declines cited weakness from the United States and Europe.
-- The rate of finished inventory accumulation was the fastest since the launch of the survey in April 2004; 16 percent of panellists reported a month-on-month rise in stocks.
-- At the same time, companies reduced their pre-production inventories of semi-manufactured goods and raw materials at the quickest pace since April 2009; 19 percent of respondents said their stocks of inputs fell in July from June.
-- Both input and output prices fell further below the neutral mark of 50. Factory gate prices dropped at the steepest rate in 15 months, reflecting stiffer competition and falling raw material prices. A quarter of respondents said their input costs fell on the month, twice as many as those who reported a rise.
-- The lengthening in delivery times was mainly due to a lack of supply at vendors. Transport difficulties were also a factor. - Reuters
No comments:
Post a Comment