Manufacturing growth slowdown continues
Print Edition
CHINA’S manufacturing sector grew at its slowest pace in five months in October, raising fresh concerns about the stability of the world’s second-largest economy.
The official purchasing managers’ index, a comprehensive gauge of operating conditions in large industrial companies, fell 0.3 points from a month earlier to 50.8, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said yesterday.
While a PMI reading above 50 indicates expansion, the October figure pointed to moderating growth for the third consecutive month and was the weakest since May.
Zhao Qinghe, a researcher at the statistics bureau, said that despite the slowdown, the reading was still above the expansion-contraction threshold, suggesting performance in industrial companies was generally stable.
Chen Zhongtao, an economist with the China Logistics Information Center, said the dip was partly due to the weeklong National Day holiday.
However, Liu Ligang, chief economist for China at Australia & New Zealand Banking Group, said that the figure was “worse than expected.”
As a result, the government will need to “maintain its relaxed bias on monetary policy,” Liu said.
The disappointing PMI figure came after earlier data showed profits at China’s industrial companies rose 0.4 percent in September — reversing a 0.6 percent dip in August — while industrial production growth accelerated to 8 percent, from 6.9 percent a month earlier.
October’s PMI sub-indexes also sent mixed signals. Though production fell 0.5 points from September to 53.1 and new orders lost 0.6 points to 51.6, employment gained 0.2 points to 48.4.
“The PMI data indicate that recovery in the sector could stall again,” said Tang Jianwei, an economist at Bank of Communications.
“There remains huge downward pressure.”
China’s economy grew at its slowest pace in more than five years in the third quarter, but major activity indicators for September, including industrial production, fixed-asset investment and retail sales, all pointed toward stabilization.
The third-quarter growth of 7.3 percent, the weakest since the first quarter of 2009, was led by the property sector, analysts said earlier.
To help avert an economic slowdown, the central bank last month extended 200 billion yuan (US$32.7 billion) in loans to commercial banks to help reduce their funding costs.
It was also reported that the government plans to increase its investment in the railway sector by at least 20 percent.
In the first nine months, China’s GDP rose 7.4 percent, largely in line with the government’s 7.5 percent target.
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