Hiccup in non-manufacturing
Source: Bloomberg News |
July 4, 2011, Monday
|
Print Edition
Print Edition
CHINA'S non-manufacturing industries expanded at the slowest pace in four months in June, adding to concerns that efforts to tame inflation are curbing growth in the world's second-biggest economy.
A purchasing managers' index dropped to 57 from 61.9 in May, the China Federation of Logistics and Purchasing said on its website yesterday. A reading above 50 indicates an expansion. A manufacturing index fell in June to the lowest level in 28 months as export orders and output grew at a slower pace, according to a Friday report by the federation.
The slowdown in manufacturing "caused a reaction in producer services," said Cai Jin, the organization's president. "Although from April it has kept dropping, the index level still shows China's non-manufacturing industries are maintaining quite quick growth. Affordable housing construction has accelerated."
The government's drive to build 10 million low-income housing units this year has increased demand for housing and building industries, Cai said. The country is boosting investment in affordable housing to counter a slump in manufacturing growth. Earlier this year, Premier Wen Jiabao set a target to build 36 million social housing units during the next five years.
The non-manufacturing PMI is based on data from industries, including transport, real estate, retailing, catering and software.
Pressure for additional monetary tightening may be easing, after manufacturers' input prices rose in June at the slowest pace since July 2010, according to logistics federation data. Morgan Stanley said inflation may have peaked last month at an estimated 6.2 percent, the highest rate since July 2008.
The central bank has raised reserve requirements 12 times and interest rates four times since January 2010.
Peng Wensheng, an economist with China International Capital Corp, expected one or two more interest rate increases this year.
A purchasing managers' index dropped to 57 from 61.9 in May, the China Federation of Logistics and Purchasing said on its website yesterday. A reading above 50 indicates an expansion. A manufacturing index fell in June to the lowest level in 28 months as export orders and output grew at a slower pace, according to a Friday report by the federation.
The slowdown in manufacturing "caused a reaction in producer services," said Cai Jin, the organization's president. "Although from April it has kept dropping, the index level still shows China's non-manufacturing industries are maintaining quite quick growth. Affordable housing construction has accelerated."
The government's drive to build 10 million low-income housing units this year has increased demand for housing and building industries, Cai said. The country is boosting investment in affordable housing to counter a slump in manufacturing growth. Earlier this year, Premier Wen Jiabao set a target to build 36 million social housing units during the next five years.
The non-manufacturing PMI is based on data from industries, including transport, real estate, retailing, catering and software.
Pressure for additional monetary tightening may be easing, after manufacturers' input prices rose in June at the slowest pace since July 2010, according to logistics federation data. Morgan Stanley said inflation may have peaked last month at an estimated 6.2 percent, the highest rate since July 2008.
The central bank has raised reserve requirements 12 times and interest rates four times since January 2010.
Peng Wensheng, an economist with China International Capital Corp, expected one or two more interest rate increases this year.
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