PMI drop signals fragile economy
By Wang Yanlin |
May 3, 2013, Friday
|
Print Edition
Print Edition
CHINA'S manufacturing activity in private and export-oriented firms grew more slowly in April, in line with that of state-owned enterprises and indicating a weaker-than-expected recovery in the world's second-largest economy.
The HSBC Purchasing Managers' Index, which measures operating conditions in large private companies, slid to 50.4 last month from March's 51.6, HSBC Holdings Plc said yesterday.
The bank said the latest index signaled a slight improvement in manufacturing operating conditions.
A reading of more than 50 indicates expansion.
The official PMI, released on Wednesday by the China Federation of Logistics and Purchasing, fell to 50.6 in April from 50.9 in March.
Qu Hongbin, chief economist for China at HSBC, said the slower growth of manufacturing activities last month confirmed the Chinese economy was in a fragile recovery.
"External demand deteriorates, and destocking pressures build up," Qu said. "The looming deflationary pressures also suggest softer overall demand conditions."
The component indices showed both production and new orders grew more weakly, while new export orders fell for the first time this year.
Chang Jian, an economist at Barclays, said the earthquake in Sichuan Province and the outbreak of bird flu raised more uncertainties about the overall economy.
"The external sector is likely to be a major headwind for Chinese growth in the coming months," Chang said.
"We maintain our growth forecast of 7.9 percent in 2013 which we have held since last December, but we see some more downside risks," he said.
China's gross domestic product expanded 7.7 percent in the first three months of 2013, slowing from 7.9 percent in the final quarter of 2012.
The HSBC Purchasing Managers' Index, which measures operating conditions in large private companies, slid to 50.4 last month from March's 51.6, HSBC Holdings Plc said yesterday.
The bank said the latest index signaled a slight improvement in manufacturing operating conditions.
A reading of more than 50 indicates expansion.
The official PMI, released on Wednesday by the China Federation of Logistics and Purchasing, fell to 50.6 in April from 50.9 in March.
Qu Hongbin, chief economist for China at HSBC, said the slower growth of manufacturing activities last month confirmed the Chinese economy was in a fragile recovery.
"External demand deteriorates, and destocking pressures build up," Qu said. "The looming deflationary pressures also suggest softer overall demand conditions."
The component indices showed both production and new orders grew more weakly, while new export orders fell for the first time this year.
Chang Jian, an economist at Barclays, said the earthquake in Sichuan Province and the outbreak of bird flu raised more uncertainties about the overall economy.
"The external sector is likely to be a major headwind for Chinese growth in the coming months," Chang said.
"We maintain our growth forecast of 7.9 percent in 2013 which we have held since last December, but we see some more downside risks," he said.
China's gross domestic product expanded 7.7 percent in the first three months of 2013, slowing from 7.9 percent in the final quarter of 2012.
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