HSBC index predicting a 7-month low for June
By Wang Yanlin |
June 22, 2012, Friday
|
Print Edition
Print Edition
CHINA'S manufacturing activities in private companies are likely to deteriorate again in June, with a preliminary reading for the HSBC Purchasing Managers' Index dropping to a seven-month low.
June's HSBC Flash PMI, the earliest available indicator of China's industrial sector and which is slanted more toward private and export-oriented firms, fell to 48.1 from May's 48.4, the bank said yesterday.
A reading under 50 means contraction.
If confirmed by the final index, it would be the eighth month for private manufacturers to report shrinking activities - the longest run of readings below 50 since the global financial crisis.
Qu Hongbin, chief economist for China at HSBC, said the pace of the slowdown seemed to be moderating. But he remained pessimistic. "With external headwinds continuing to be strong, exports are likely to decelerate in the coming months," Qu said. "The sharp fall of prices and moderation of new orders suggests weak domestic demand, posing destocking pressures for Chinese manufacturers."
Qu said that would likely weigh on the job market, and he expected a more decisive policy stimulus.
China has rolled out a set of stimulus measures, including subsidies for energy-efficient consumption, expansion of private investment in the state-dominant sector, faster approval of new investment projects and tax reform acceleration.
The central bank also announced an interest rate cut earlier this month.
"The government is sending a signal through these moves to boost confidence among the public," said Lian Ping, chief economist at the Bank of Communications. He expected gross domestic product growth to stay at 8 to 8.5 percent.
The country's economic performance stabilized last month following April's sharp deterioration. Industrial production expanded 9.6 percent from a year earlier, up 0.3 percentage points from the figure in April.
June's HSBC Flash PMI, the earliest available indicator of China's industrial sector and which is slanted more toward private and export-oriented firms, fell to 48.1 from May's 48.4, the bank said yesterday.
A reading under 50 means contraction.
If confirmed by the final index, it would be the eighth month for private manufacturers to report shrinking activities - the longest run of readings below 50 since the global financial crisis.
Qu Hongbin, chief economist for China at HSBC, said the pace of the slowdown seemed to be moderating. But he remained pessimistic. "With external headwinds continuing to be strong, exports are likely to decelerate in the coming months," Qu said. "The sharp fall of prices and moderation of new orders suggests weak domestic demand, posing destocking pressures for Chinese manufacturers."
Qu said that would likely weigh on the job market, and he expected a more decisive policy stimulus.
China has rolled out a set of stimulus measures, including subsidies for energy-efficient consumption, expansion of private investment in the state-dominant sector, faster approval of new investment projects and tax reform acceleration.
The central bank also announced an interest rate cut earlier this month.
"The government is sending a signal through these moves to boost confidence among the public," said Lian Ping, chief economist at the Bank of Communications. He expected gross domestic product growth to stay at 8 to 8.5 percent.
The country's economic performance stabilized last month following April's sharp deterioration. Industrial production expanded 9.6 percent from a year earlier, up 0.3 percentage points from the figure in April.
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