Manufacturing edging to brink of stagnation
By Wang Yanlin |
June 24, 2011, Friday
|
Print Edition
Print Edition
CHINA'S manufacturing activities were getting closer to the brink of stagnation in June although producer price pressures may have eased, a preliminary reading for the HSBC Purchasing Managers' Index showed yesterday.
The HSBC Flash PMI, the earliest available indicator of manufacturing sector operating conditions, stood at an 11-month low of 50.1 in June. It was down from May's final HSBC PMI of 51.6 and 51.8 in April.
A reading above 50 points to expansion, a reading below 50 means contraction.
HSBC chief economist Qu Hongbin said: "Demand is cooling thanks to the effect of tightening measures and the slackness in external markets. This, plus the ongoing inventory destocking, has led to a slowdown in output growth.
"But hard-landing worries are unwarranted because the current PMI is at a level consistent with around 13 percent industrial production growth."
The good news was that inflationary pressures at the factory gate started to ease meaningfully in June amid slowing demand.
The flash data report said both output and input prices under the final PMI will show a slower rate, without specifying figures.
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.
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, the National Development and Reform Commission said earlier this week, and some economists expect a level as high as 6 percent for this month.
Qu said earlier that China's policy focus should still be tilted toward taming inflation, and he expected more tightening policies.
China's industrial output saw a rise of 13.3 percent year on year in May, down from April's 13.4 percent and 14.8 percent in March.
The HSBC Flash PMI, the earliest available indicator of manufacturing sector operating conditions, stood at an 11-month low of 50.1 in June. It was down from May's final HSBC PMI of 51.6 and 51.8 in April.
A reading above 50 points to expansion, a reading below 50 means contraction.
HSBC chief economist Qu Hongbin said: "Demand is cooling thanks to the effect of tightening measures and the slackness in external markets. This, plus the ongoing inventory destocking, has led to a slowdown in output growth.
"But hard-landing worries are unwarranted because the current PMI is at a level consistent with around 13 percent industrial production growth."
The good news was that inflationary pressures at the factory gate started to ease meaningfully in June amid slowing demand.
The flash data report said both output and input prices under the final PMI will show a slower rate, without specifying figures.
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.
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, the National Development and Reform Commission said earlier this week, and some economists expect a level as high as 6 percent for this month.
Qu said earlier that China's policy focus should still be tilted toward taming inflation, and he expected more tightening policies.
China's industrial output saw a rise of 13.3 percent year on year in May, down from April's 13.4 percent and 14.8 percent in March.
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