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HSBC flash PMI dips to 48.3 in June
By Wang Yanlin |
June 20, 2013, Thursday
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Online Edition
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CHINA'S manufacturing activity may fall to a nine-month low in June due to weaker demand at both home and abroad, a survey showed today.
It's another sign the world's second-largest economy's recovery is more fragile than expected and may prompt policy changes.
The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of the sector's vitality, retreated to 48.3 in June, down from May's final reading of 49.2.
A reading below 50 means contraction.
June is likely to become the index's second straight decline. It is slanted toward private and export-oriented firms.
Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC Holdings Plc, said the manufacturing sector in China is weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures.
"China prefers to use reforms rather than stimulus to sustain growth," Qu said. "While reforms can boost long-term growth prospects, they will have a limited impact in the short term."
Qu said he expected slightly weaker growth in the second quarter.
China's economic growth, which slowed to 7.7 percent in the first three months from 7.9 percent in the last quarter of 2012, has triggered calls for policy easing as inflation has dropped in recent months.
HSBC on Wednesday lowered its projection for China's growth to 7.4 percent for this year and next. The lender previously forecast an 8.2 percent gain for 2013 and 8.4 percent for 2014.
It's another sign the world's second-largest economy's recovery is more fragile than expected and may prompt policy changes.
The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of the sector's vitality, retreated to 48.3 in June, down from May's final reading of 49.2.
A reading below 50 means contraction.
June is likely to become the index's second straight decline. It is slanted toward private and export-oriented firms.
Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC Holdings Plc, said the manufacturing sector in China is weighed down by deteriorating external demand, moderating domestic demand and rising destocking pressures.
"China prefers to use reforms rather than stimulus to sustain growth," Qu said. "While reforms can boost long-term growth prospects, they will have a limited impact in the short term."
Qu said he expected slightly weaker growth in the second quarter.
China's economic growth, which slowed to 7.7 percent in the first three months from 7.9 percent in the last quarter of 2012, has triggered calls for policy easing as inflation has dropped in recent months.
HSBC on Wednesday lowered its projection for China's growth to 7.4 percent for this year and next. The lender previously forecast an 8.2 percent gain for 2013 and 8.4 percent for 2014.
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