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Chinese manufacturing index falls to 6.5-year low, raising concerns
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CHINESE manufacturing activity fell to its lowest level in six and half years in September, adding to concerns about the continued weakness in the world’s second-largest economy, according to a survey released yesterday.
The Caixin Flash China General Manufacturing Purchasing Managers’ Index, the earliest indicator of manufacturing activity slated toward private and export-oriented firms, fell to 47 in September from 47.3 in August.
It was the lowest since March 2009 and below the 50-point mark that separates expansion and contraction, according to the latest poll done by research firm Markit and sponsored by Caixin magazine.
China’s factories have now seen activity contract for seven months.
“The reading indicates the country’s manufacturing industry has reached a crucial stage in the structural transformation process,” said He Fan, chief economist at Caixin Insight Group.
“But overall, economic fundamentals are good ... The principal reason for the weakening is tied to previous changes related to external demand and prices,” He said, adding that fiscal spending surged in August.
“Patience may be needed for policies to take effect and stabilize the economy,” He said.
The weakness in the September figures was broad-based. Sub-indexes showed that manufacturing output, new orders, new export orders and employment all fell at a faster pace.
Zhu Haibin, chief economist for China at JPMorgan, said the data will intensify people’s concerns about China’s growth prospects.
China’s economy grew 7 percent in the second quarter of the year, beating the average market forecast of 6.8 percent and in line with the government’s full-year target of around 7 percent.
However, key data for trade, industrial production, retail sales and fixed-asset investment in the past two months all pointed to a continuing economic slowing.
The Asian Development Bank on Tuesday cut its forecast of China’s 2015 economic growth to 6.8 percent from the previous 7.2 percent made in March.
On Monday, the Chinese Academy of Social Sciences, a think tank, released a report that predicted the economy to expand a slower 6.9 percent from a year earlier in 2015.
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