China manufacturing slowdown ripples through region

Mon Sep 1, 2014 1:36am EDT
 
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By Wayne Cole

SYDNEY (Reuters) - Growth in China's vast factory sector slackened in August as foreign and domestic demand slowed, stoking speculation that further policy easing would be needed to prevent the economy from stumbling once more.

The surveys of purchasing managers (PMI) from across Asia told a tale of underwhelming new orders and faltering exports, overshadowing brighter spots such as India and Taiwan.

That was a taster for a feast of euro zone PMIs due later Monday where any weakness would only add to pressure on the European Central Bank to at least open the door to more monetary stimulus at its policy meeting this week. ECONEUROPE

The Chinese surveys come in both official and private sector flavors. The National Bureau of Statistic's version fell from a 27-month high to 51.1 in August, as factories shed jobs for at least the 24th consecutive month.

More worrying was the HSBC/Markit PMI, which eased to 50.2 in August, only a whisker above the 50-point mark that separates expansion from contraction.

The official survey showed falls across output, employment, new orders, delivery time and raw material inventory, while the private version highlighted subdued demand.

"The economy is healthier than it was in early 2014, but the recovery is tepid and patchy, with housing weakness a weighty anchor on both activity and confidence," said Huw McKay, a senior international economist at Westpac in Sydney.

"The authorities would be wise to stay the course with easier policy settings, especially on the fiscal side."   Continued...

 
Workers install the chassis along a production line at a truck factory of Anhui Jianghuai Automobile Co. Ltd (JAC Motors) in Hefei, Anhui province May 5, 2014.  REUTERS/Stringer