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Flash PMI indicates contraction
By Feng Jianmin |
December 16, 2011, Friday
|
Print Edition
Print Edition
CHINA'S manufacturing activities may contract more slowly in December after a slight easing of monetary policies, but economic growth will remain weak as exports and the property market continued to falter, according to an industry index yesterday.
The HSBC Flash China Purchasing Managers' Index, the earliest available indicator of industrial operating conditions, hit 49 in December, 1.3 points higher than the 32-month low in November. It settled at 51.1 in October.
A reading below 50 indicates a contraction.
"The pace of slowdown stabilized in December but the growth momentum remains weak with additional downside risks from exports and the property market not yet fully filtering through," said Qu Hongbin, chief economist for China at HSBC.
A subindex measuring new export orders fell to 50.5 from 52.1, but this reading is considered an expansion.
The central bank announced on Tuesday that bank lending in November rose more slowly and the money supply grew at the slowest in a decade. The government said it will maintain a "prudent" monetary policy next year while allowing "fine-tuning" and flexibility to sustain economic growth.
China cut reserve requirement ratio for banks in early December by 0.5 percentage point, releasing an additional 400 billion yuan for lending.
"With inflation quickly shifting to disinflation, the Chinese government can and should ease more aggressively fiscal and monetary policies to stabilize growth and jobs," Qu said.
Meanwhile, home transactions in more than 70 percent of China's major cities in November fell monthly, with over half of them easing between 10-50 percent, according to report by Soufun.com.
The HSBC Flash China Purchasing Managers' Index, the earliest available indicator of industrial operating conditions, hit 49 in December, 1.3 points higher than the 32-month low in November. It settled at 51.1 in October.
A reading below 50 indicates a contraction.
"The pace of slowdown stabilized in December but the growth momentum remains weak with additional downside risks from exports and the property market not yet fully filtering through," said Qu Hongbin, chief economist for China at HSBC.
A subindex measuring new export orders fell to 50.5 from 52.1, but this reading is considered an expansion.
The central bank announced on Tuesday that bank lending in November rose more slowly and the money supply grew at the slowest in a decade. The government said it will maintain a "prudent" monetary policy next year while allowing "fine-tuning" and flexibility to sustain economic growth.
China cut reserve requirement ratio for banks in early December by 0.5 percentage point, releasing an additional 400 billion yuan for lending.
"With inflation quickly shifting to disinflation, the Chinese government can and should ease more aggressively fiscal and monetary policies to stabilize growth and jobs," Qu said.
Meanwhile, home transactions in more than 70 percent of China's major cities in November fell monthly, with over half of them easing between 10-50 percent, according to report by Soufun.com.
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