Slowdown in economy continues
By Wang Yanlin |
June 2, 2011, Thursday
|
Print Edition
Print Edition
CHINA'S manufacturing activities continued to slow in May, with a key economic indicator falling to a nine-month low amid government efforts to curb soaring prices and cool the economy.
Analysts expect further moderation due to power shortages in coming months and rising costs.
The Purchasing Managers' Index, a comprehensive gauge of industrial activity across the country, decreased 0.9 percentage points from a month earlier to 52 percent, the China Federation of Logistics and Purchasing said yesterday.
The index was 53.4 percent in March, 52.2 percent in February and 52.9 percent in January.
Above 50 indicates expansion.
With regard to the sub-indexes, the purchase price index, assessing the cost of raw materials, led the declines with a month-on-month drop of 5.9 percentage points, while the new orders index, backlog orders index and raw material inventory index all had declines of more than 1 percentage point.
Production slowed 0.4 percentage points from a month earlier to 54.9 percent in May, new orders shed 1.7 percentage points to 52.1 percent, employment settled at 50.9 percent and input prices at 60.3 percent.
"The continuous decline underlines that China's economy is more likely to slow down," Zhang Liqun, a researcher with the Development Research Center of the State Council, said. "Furthermore, the sharp decline of the purchase price index suggests inflationary expectations may ease."
Cai Jin, the federation's vice president, said the 5.9 percentage point decline in the purchase price index suggests the impact of rising commodity prices on inflation may be weakening.
"Less active manufacturing activities were expected as China's tightening polices took effect," said Peng Wensheng, chief economist at the China International Capital Corp Ltd. "But it eased at a steady pace that may be unable to prevent policy-makers from releasing more tightening measures."
Peng estimated the index would continue to moderate because of potential power rationing, but he said it was less likely to drop below 50 percent any time soon.
The HSBC China Manufacturing Purchasing Managers' Index, slanted more toward privately owned and export-oriented firms, reflected a similar trend to the official rate. It stood at 51.6 in May, a 10-month low.
Manufacturers may face higher production costs after China raised the price of electricity for industrial, commercial and agricultural purposes in 15 provinces and municipalities.
They may also face power shortages because of insufficient generating capacity.
Analysts expect further moderation due to power shortages in coming months and rising costs.
The Purchasing Managers' Index, a comprehensive gauge of industrial activity across the country, decreased 0.9 percentage points from a month earlier to 52 percent, the China Federation of Logistics and Purchasing said yesterday.
The index was 53.4 percent in March, 52.2 percent in February and 52.9 percent in January.
Above 50 indicates expansion.
With regard to the sub-indexes, the purchase price index, assessing the cost of raw materials, led the declines with a month-on-month drop of 5.9 percentage points, while the new orders index, backlog orders index and raw material inventory index all had declines of more than 1 percentage point.
Production slowed 0.4 percentage points from a month earlier to 54.9 percent in May, new orders shed 1.7 percentage points to 52.1 percent, employment settled at 50.9 percent and input prices at 60.3 percent.
"The continuous decline underlines that China's economy is more likely to slow down," Zhang Liqun, a researcher with the Development Research Center of the State Council, said. "Furthermore, the sharp decline of the purchase price index suggests inflationary expectations may ease."
Cai Jin, the federation's vice president, said the 5.9 percentage point decline in the purchase price index suggests the impact of rising commodity prices on inflation may be weakening.
"Less active manufacturing activities were expected as China's tightening polices took effect," said Peng Wensheng, chief economist at the China International Capital Corp Ltd. "But it eased at a steady pace that may be unable to prevent policy-makers from releasing more tightening measures."
Peng estimated the index would continue to moderate because of potential power rationing, but he said it was less likely to drop below 50 percent any time soon.
The HSBC China Manufacturing Purchasing Managers' Index, slanted more toward privately owned and export-oriented firms, reflected a similar trend to the official rate. It stood at 51.6 in May, a 10-month low.
Manufacturers may face higher production costs after China raised the price of electricity for industrial, commercial and agricultural purposes in 15 provinces and municipalities.
They may also face power shortages because of insufficient generating capacity.
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