Chinese manufacturing at 3-year low
BEIJING, China - China's manufacturing activity fell to its lowest level in more than three years in August as the global economic slowdown continues to weigh on the world's largest exporter, HSBC said Monday.
The final reading of the British banking giant's closely-watched purchasing managers' index (PMI), which gauges nationwide manufacturing activity, slid to 47.6 last month from 49.3 in July, HSBC said in a statement.
This was the lowest since March 2009 and marked the tenth consecutive monthly fall, the bank said. It chimed with the official PMI figure released Saturday, which hit a nine-month low of 49.2 from 50.1 in July.
A PMI reading above 50 indicates expansion, while one below 50 points to contraction.
HSBC economist Qu Hongbin said the figures showed China's manufacturing sector faced "intensifying downward pressure" and urged the government to step up easing measures.
"China's exporters are facing increasing difficulties amid stronger global headwinds," he said, adding new export orders contracted last month at the sharpest pace since March 2009 while employers cut jobs at the fastest rate in 41 months.
Ren Xianfang, an analyst with research firm IHS Global Insight, linked the August fall to a slowdown in US consumption in the second quarter.
"The deterioration in exports since July has rung alarm bells" in China, she added.
Exports to the United States rose by a marginal 0.6 per cent to US$30.1 billion in July from a year ago, compared with 11.4-per cent growth in the first seven months of the year, official data showed.
Authorities have tried to boost the economy with interest rate cuts and by lowering the amount of reserves that banks must keep on hand in a bid to spur the kind of lending that could stimulate a rebound.
However, HSBC's Qu said the latest manufacturing figures indicated the previous stimulus efforts were insufficient.
"Beijing must step up policy easing to stabilise growth and foster job market conditions," he said.
China's economic expansion slowed to 7.6 per cent in the April-June second quarter, the worst performance in three years and the sixth straight quarter of slower growth.
July figures for trade, industrial output, retail sales and foreign direct investment were also weak.
The People's Daily — mouthpiece of China's ruling Communist party — indicated in an editorial Monday that Beijing was eager to avoid knee-jerk reactions to the current slowdown.
"We must implement current policies and measures well but also build up the inventory of ammunitions," it said. "We must tackle short-term and urgent issues, but also grasp the opportunity to cure long-standing ills."
But many analysts urged China to do more to fend off the impact of weakened exports and a slowing property sector.
"At best, the economy has stopped weakening, but recovery remains elusive," said Wang Qinwei, a London-based economist with Capital Economics, in a research note.