China factory surveys signal economic growth easing into Q3

Mon Sep 3, 2012 7:27am EDT
 
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By Lucy Hornby

BEIJING (Reuters) - China's vast manufacturing sector has been badly hit by slowing new orders, two complementary surveys showed, a sign that the pace of growth in the world's second-largest economy will weaken well into the third quarter and possibly beyond.

The final reading of the HSBC China manufacturing purchasing managers' index (PMI) for August fell to a seasonally adjusted 47.6, its lowest level since March 2009, down from 49.3 in July and slightly below a flash reading of the index late last month.

It followed China's official factory purchasing managers' index (PMI) - one of the early indicators of the state of the economy - which fell to a lower-than-expected 49.2 in August, the National Bureau of Statistics said on Saturday.

It was the first time since November 2011 that the official PMI had fallen below 50, which separates expansion from contraction. Economists polled by Reuters last week had expected it to slip to 50 from 50.1 in July.

The HSBC PMI though has been below 50 for 10 straight months.

"Beijing must step up policy easing to stabilize growth and foster job market conditions," Qu Hongbin, chief China economist at HSBC said in a statement accompanying the survey.

Chief among manufacturers' concerns is softness in new orders as demand falters, particularly from the euro zone.

The HSBC new orders sub-index fell to its lowest point since March 2009, helping drag output back into contraction after a more hopeful July. The HSBC output sub-index is at its lowest level since March.   Continued...

 
A labourer works at a textile mill in Huaibei, Anhui province, in this August 1, 2012 file picture. China's vast manufacturing sector has been badly hit by slowing new orders, a weekend survey showed, a sign that the pace of growth in the world's second-largest economy will weaken well into the third quarter. China's official factory purchasing managers' index (PMI) -- one of the early indicators of the state of the economy -- fell to a lower-than-expected 49.2 in August, the National Bureau of Statistics said September 2, 2012. REUTERS/Stringer/Files