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HSBC predicts China PMI to drop again in May
By Wang Yanlin |
May 24, 2012, Thursday
|
Online Edition
Online Edition
CHINA'S manufacturing activities in the private sector are likely to slow further in May, reaching a two-month low, according to a preliminary reading for the HSBC Purchasing Managers' Index.
May's HSBC Flash PMI, the earliest indicator of China's industrial sector and more slanted toward the private and export-oriented firms, retreated to 48.7 from April's 49.3, the bank said today.
A reading under 50 means contraction in manufacturing activities. The final reading is due next Friday.
Qu Hongbin, chief economist for China at HSBC, said the falling index reflected a modest deterioration in operating conditions among manufacturers.
"Manufacturing activities softened again in May due to deteriorating export situation," Qu said.
"This calls for more aggressive policy easing as inflation continues to ease. Beijing policy makers have been and will be stepping up easing efforts to stabilize growth, as indicated by a slew of measures to boost liquidity, public housing and infrastructure investment, as well as consumption," Qu said.
Qu still expected China to achieve a soft landing in the coming quarters as easing measures filter through.
On Wednesday, the central government announced a set of new measures to boost the economy.
The State Council decided that the country will accelerate the construction of major infrastructure projects, and will allow private investment into state-dominated sectors like railway, energy, telecommunications, education and health care.
The announcement was the latest of a number of pledges made this week by China's top leaders including Premier Wen Jiabao and Vice Premier Li Keqiang to stabilize the economy by fine-tuning policies.
China's gross domestic product expanded 8.1 percent from a year earlier in the first quarter, the weakest in nearly three years. April's key economic data, including industrial production, fix-asset investment and retail sales, showed signs of moderation and stoked fears for a sharp economic slowdown.
May's HSBC Flash PMI, the earliest indicator of China's industrial sector and more slanted toward the private and export-oriented firms, retreated to 48.7 from April's 49.3, the bank said today.
A reading under 50 means contraction in manufacturing activities. The final reading is due next Friday.
Qu Hongbin, chief economist for China at HSBC, said the falling index reflected a modest deterioration in operating conditions among manufacturers.
"Manufacturing activities softened again in May due to deteriorating export situation," Qu said.
"This calls for more aggressive policy easing as inflation continues to ease. Beijing policy makers have been and will be stepping up easing efforts to stabilize growth, as indicated by a slew of measures to boost liquidity, public housing and infrastructure investment, as well as consumption," Qu said.
Qu still expected China to achieve a soft landing in the coming quarters as easing measures filter through.
On Wednesday, the central government announced a set of new measures to boost the economy.
The State Council decided that the country will accelerate the construction of major infrastructure projects, and will allow private investment into state-dominated sectors like railway, energy, telecommunications, education and health care.
The announcement was the latest of a number of pledges made this week by China's top leaders including Premier Wen Jiabao and Vice Premier Li Keqiang to stabilize the economy by fine-tuning policies.
China's gross domestic product expanded 8.1 percent from a year earlier in the first quarter, the weakest in nearly three years. April's key economic data, including industrial production, fix-asset investment and retail sales, showed signs of moderation and stoked fears for a sharp economic slowdown.
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