| China PMI touches 7-month low |
BEIJING Chinese manufacturing activity hit a seven-month low in June, data from HSBC showed on Thursday, putting pressure on Beijing to do more to boost the world’s second-largest economy.
The banking giant said preliminary figures from its closely watched purchasing managers’ index (PMI), which gauges the manufacturing sector, fell to 48.1 in June from 48.4 in May on shrinking exports and weak domestic demand.
The June figure also marked the eighth consecutive month that manufacturing has contracted.
Analysts said the results suggest China will move again to boost its slowing economy, after cutting interest rates earlier this month and encouraging more government investment. “China’s manufacturing sector continued to slow in June,” HSBC’s co-head of Asian economic research, Qu Hongbin, said in the statement.
“With external headwinds remaining strong, exports are likely to decelerate in the coming months.”
New export orders, a component of PMI, recorded their sharpest decline since March 2009, HSBC said, but did not give a figure. The bank will release the final data for June next month.
In a further worry for the economy, weaker prices and a contraction in new orders suggested domestic demand is also flagging, Qu said. “We expect more decisive policy stimulus to reverse the growth slowdown,” he said.
“China will likely speed up loosening monetary policy in the future, with the magnitude depending on the situation with the euro zone debt crisis and the recovery in the US economy,” Liao Qun, chief economist at Citic Bank International in Hong Kong, said.
Chinese stocks fell after the release of PMI, with the benchmark Shanghai index ending down 1.4 per cent.
“The PMI reading intensified worries over an economic slowdown,” Zhang Yanbing, a Shanghai-based analyst at Zheshang Securities, said.
Agence France-Presse
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