From copper to cameras; feeling the heat from China slowdown
By Langi Chiang and Jonathan Standing
BEIJING (Reuters) - China's manufacturing engine lost further momentum in July and the job market weakened, a survey showed on Wednesday, complicating a transition to consumer-driven growth and boding ill for so many leveraged to the world's second-largest economy.
The knock-on effects are already being felt farther afield - from a slowdown in Japanese export growth despite a weaker yen to Apple Inc lamenting a rare drop in Chinese demand for its premium brand of gadgets.
"China's slowdown is starting to become more dangerous," warned Yasuo Yamamoto, a senior economist at Mizuho Research Institute in Tokyo.
Since taking office in March, China's new leaders have said they are prepared to tolerate tamer growth and push a restructuring of the economy toward domestic consumption, but there have been mixed messages on how much of a slowing they would tolerate. The flow of data suggests their task of changing the shape of the massive economy will only get harder.
Wednesday's flash HSBC/Markit Purchasing Managers' Index showed output, employment and new orders all declining at a faster pace in July. The overall index of business conditions fell to 47.7 from June's final reading of 48.2, a third straight month below the watershed 50 line which divides expansion from contraction, and the weakest level since August 2012.
The employment sub-index slid to 47.3 in July, the weakest since the depths of the global financial crisis in early 2009.
"This print could reignite fears of a Chinese hard landing," said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore. "We expect economic growth to continue moderating towards 7 percent."
China's economy grew 7.5 percent in April-June from a year earlier, the ninth quarter of slowdown in the past 10 quarters. Continued...