Manufacturing weakens to five-month low
By Wang Yanlin |
June 2, 2012, Saturday
|
Print Edition
Print Edition
CHINA'S manufacturing in May weakened to a five-month low, putting more pressure on the central government to loosen its rein on its monetary policy to prevent a sharp economic slowdown.
The official Purchasing Managers' Index, a comprehensive gauge of manufacturing weighted toward state enterprises, fell to 50.4 last month from April's 53.3, the China Federation of Logistics and Purchasing said yesterday. A reading above 50 means expansion. The opposite points to contraction.
The component indices indicated demand from home and abroad scaled back, as new orders fell 4.7 points to 49.8, and new export orders lost 1.8 points to 50.4. The federation said industries such as furniture, machinery equipment, vehicles and non-ferrous metal reported notable shrinkage in market demand.
"The official PMI presented a sharp and broad-based decrease as feared, even below our expectation of 52," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd. "It was a reflection of previous disappointing industrial production and power consumption data, and was very close to the reading of 50 which separates expansion from contraction."
China's industrial production growth weakened more than expected to 9.3 percent in April and profits in factories fell 2.2 percent, compared with an annual gain of 4.5 percent in March.
Zhou said the PMI data indicated the possibility of worsening industrial output this month and the next and greatly raised the likelihood of an interest rate decrease in the near term.
The HSBC China Manufacturing Purchasing Managers' Index, slanted more toward private and export firms, was at 48.4 in May, down from April's 49.3, signaling a seventh straight month of worsening manufacturing conditions.
"May's final reading confirmed that manufacturing growth slowed further on weakening demand from both global and domestic markets," said Qu Hongbin, chief economist for China at HSBC. "This points to a continuous slowdown of the real economy in the second quarter and should promote China to step up easing efforts in the coming months."
Qu suggested policy-makers let fiscal measures and private investment to play a bigger role in growth, complementing monetary easing via reserve requirement ratio cuts and possibly one interest rate reduction of 0.25 percent.
China's gross domestic product grew 8.1 percent in the first quarter, the slowest pace in nearly three years, prompting fears of a hard landing.
Since last week, China has unveiled a set of measures to boost the sagging economy, at a time when some analysts forecast growth may slip below 7.5 percent in the current quarter.
Measures included subsidies for buying energy-saving appliances and alternative-energy cars, and expansion of private investment into some state-dominated fields. The National Development and Reform Commission, the top economic planning agency, sped up approval of new investment projects.
"Further monetary policy easing, plus faster implementation of the government's fiscal commitments, will help cushion the decline in Chinese economic activities," said Li Maoyu at Changjiang Securities Co. "The economy may start to rebound from June onwards."
The official Purchasing Managers' Index, a comprehensive gauge of manufacturing weighted toward state enterprises, fell to 50.4 last month from April's 53.3, the China Federation of Logistics and Purchasing said yesterday. A reading above 50 means expansion. The opposite points to contraction.
The component indices indicated demand from home and abroad scaled back, as new orders fell 4.7 points to 49.8, and new export orders lost 1.8 points to 50.4. The federation said industries such as furniture, machinery equipment, vehicles and non-ferrous metal reported notable shrinkage in market demand.
"The official PMI presented a sharp and broad-based decrease as feared, even below our expectation of 52," said Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd. "It was a reflection of previous disappointing industrial production and power consumption data, and was very close to the reading of 50 which separates expansion from contraction."
China's industrial production growth weakened more than expected to 9.3 percent in April and profits in factories fell 2.2 percent, compared with an annual gain of 4.5 percent in March.
Zhou said the PMI data indicated the possibility of worsening industrial output this month and the next and greatly raised the likelihood of an interest rate decrease in the near term.
The HSBC China Manufacturing Purchasing Managers' Index, slanted more toward private and export firms, was at 48.4 in May, down from April's 49.3, signaling a seventh straight month of worsening manufacturing conditions.
"May's final reading confirmed that manufacturing growth slowed further on weakening demand from both global and domestic markets," said Qu Hongbin, chief economist for China at HSBC. "This points to a continuous slowdown of the real economy in the second quarter and should promote China to step up easing efforts in the coming months."
Qu suggested policy-makers let fiscal measures and private investment to play a bigger role in growth, complementing monetary easing via reserve requirement ratio cuts and possibly one interest rate reduction of 0.25 percent.
China's gross domestic product grew 8.1 percent in the first quarter, the slowest pace in nearly three years, prompting fears of a hard landing.
Since last week, China has unveiled a set of measures to boost the sagging economy, at a time when some analysts forecast growth may slip below 7.5 percent in the current quarter.
Measures included subsidies for buying energy-saving appliances and alternative-energy cars, and expansion of private investment into some state-dominated fields. The National Development and Reform Commission, the top economic planning agency, sped up approval of new investment projects.
"Further monetary policy easing, plus faster implementation of the government's fiscal commitments, will help cushion the decline in Chinese economic activities," said Li Maoyu at Changjiang Securities Co. "The economy may start to rebound from June onwards."
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
