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June's manufacturing index slips to 11-month low
By Wang Yanlin |
June 23, 2011, Thursday
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Online Edition
Online Edition
CHINA'S manufacturing activities slowed down in June to the brink of stagnation although producer price pressures may ease, HSBC's preliminary Purchasing Managers Index showed today.
The HSBC Flash PMI, the earliest available indicator of the manufacturing sector, stood at an 11-month low of 50.1 in June, down from May's final HSBC PMI of 51.6 and 51.8 in April.
A reading above 50 indicates expansion, while a reading below 50 means contraction.
Commenting on the falling index, HSBC chief economist Qu Hongbin said it was not a warrant of a hard landing for China's economy.
"Demand is cooling thanks to the effect of tightening measures and languid external markets. This, plus the ongoing inventory destocking, has led to a slowdown in output growth," Qu said.
"But hard-landing worries are unwarranted because the current PMI is at a level consistent with the 13 percent industrial growth," he said, adding that inflationary pressures on manufacturers started to ease in June amid slowing demand.
China's Producer Price Index was kept flat at an annualized 6.8 percent in May, indicating a possible turning point in the fight against inflation because lower producer prices will be reflected in consumer prices sooner or later.
China's Consumer Price Index, the main gauge of inflation, surged to a 34-month high of 5.5 percent in May. Its growth may peak in June or July to a high of 6 percent, the National Development and Reform Commission said yesterday.
Qu said earlier that China's policy focus should still be tilted towards taming inflation, and he expected to see more tightening measures despite of a lackluster industrial performance.
China's industrial output rose 13.3 percent year-on-year in May, down from 13.4 percent in April and 14.8 percent in March.
The flash data are published about one week before the final PMI data are released. The estimate is based on more than 85 percent of total PMI survey responses and aims to provide an accurate indication of the final data.
The HSBC Flash PMI, the earliest available indicator of the manufacturing sector, stood at an 11-month low of 50.1 in June, down from May's final HSBC PMI of 51.6 and 51.8 in April.
A reading above 50 indicates expansion, while a reading below 50 means contraction.
Commenting on the falling index, HSBC chief economist Qu Hongbin said it was not a warrant of a hard landing for China's economy.
"Demand is cooling thanks to the effect of tightening measures and languid external markets. This, plus the ongoing inventory destocking, has led to a slowdown in output growth," Qu said.
"But hard-landing worries are unwarranted because the current PMI is at a level consistent with the 13 percent industrial growth," he said, adding that inflationary pressures on manufacturers started to ease in June amid slowing demand.
China's Producer Price Index was kept flat at an annualized 6.8 percent in May, indicating a possible turning point in the fight against inflation because lower producer prices will be reflected in consumer prices sooner or later.
China's Consumer Price Index, the main gauge of inflation, surged to a 34-month high of 5.5 percent in May. Its growth may peak in June or July to a high of 6 percent, the National Development and Reform Commission said yesterday.
Qu said earlier that China's policy focus should still be tilted towards taming inflation, and he expected to see more tightening measures despite of a lackluster industrial performance.
China's industrial output rose 13.3 percent year-on-year in May, down from 13.4 percent in April and 14.8 percent in March.
The flash data are published about one week before the final PMI data are released. The estimate is based on more than 85 percent of total PMI survey responses and aims to provide an accurate indication of the final data.
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