China's Manufacturing Activity Slows: Survey

Tuesday, 04 May 2010 01:33 PM

 

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China's manufacturing activity slowed in April, suggesting government measures aimed at reining in the world's third-largest economy were bearing fruit, an independent survey showed Tuesday.

The HSBC China Manufacturing PMI, or purchasing managers index, fell to 55.4 in April from 57.0 in March.

The April figure marked the 13th straight month of expansion but was the lowest reading in six months, the bank said. A reading above 50 means the sector is expanding, while below 50 indicates an overall decline.

"April's PMI points to a moderate slowdown in the expansion of manufacturing activity," said HSBC chief economist Qu Hongbin.

"We see this as good news because it means that Beijing's policy tightening is starting to cool the overheated economy, which will help to contain inflationary risk in the coming quarters."

A separate survey released by a government agency on Saturday showed manufacturing activity had accelerated to 55.7 in April from 55.1 in March.

HSBC's results are based on interviews with purchasing managers at more than 400 companies, while the survey by the China Federation of Logistics and Purchasing covers more than 700 firms.

Both surveys showed a sharp increase in input prices, reflecting higher costs for raw materials such as copper, cotton, oil and steel.

"Average input costs faced by Chinese manufacturing firms rose for the tenth successive month in April, increasing at a considerable rate that was the fastest in three months," HSBC said.

The Chinese government agency warned that pressure on production costs was expected to "increase significantly" in the coming months and could fuel inflationary pressures.

"We need to pay close attention to the difficulties that companies are facing," government analyst Zhang Liqun said in a commentary released with the data.

On Sunday, Beijing announced fresh measures to rein in bank lending to calm inflationary pressures and avoid a damaging bubble in the real estate market.

China's economy grew by a blistering 11.9 percent in the first quarter of 2010, fueling fears the booming economy was at risk of overheating.

© AFP 2014

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