Tags: China | Manufacturing | Export | Demand

China's Manufacturing Slows as Export Demand Weakens, Stimulus Fades

Thursday, 01 Jul 2010 07:13 AM

Slowing global demand and a retreat from stimulus policies led to a weakening in China's manufacturing in June for a third month, surveys showed Thursday.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, fell to 52.1 in June from 53.9 in May and 55.7 in April.

The index, an indicator of future manufacturing trends, has remained above 50 for 16 straight months after slowing in late 2008 and early 2009. But it has declined for the past three months.

Another survey, the HSBC China Manufacturing PMI, a seasonally adjusted index designed to measure the performance of the manufacturing economy,  fell to 50.4 in June from 52.7 in May and 55.2 in April.

Although numbers above 50 for both surveys show manufacturing activity expanding, HSBC Corp.'s May reading was the lowest in a year.

"Manufacturers widely mentioned that reduced new export business reflected lackluster global demand," the HSBC survey said.

Prices set by manufacturers also fell slightly in a shift away from the inflation seen earlier in the year, it said. The survey attributed the easing in price pressures to lower costs for raw materials as well as demands from customers for discounts.

The slowdown was expected given efforts to cool property prices by tightening credit, as well as a tapering off of government-backed stimulus spending on construction and other projects. But it comes amid growing concerns over a possible "double-dip" in growth, especially if export demand plunges again due to a relapse into recession in other major economies.

Qu Hongbin, head of Asian economic research at HSBC, said tightening was part of the reason for the moderation in manufacturing activity.

"But fears about a hard-landing are overplayed," he said, forecasting growth in the latter half of the year at about 9 percent.

The federation said its survey showed a decline in demand for chemicals, petroleum products and ferrous metals -- key industrial materials. But the outlook for agricultural products and food, household goods, textiles and tobacco remained strong, partly reflecting strong local demand, it said.

The figures also may reflect steadier demand that shows a more sustainable pace of growth after the economy expanded 11.9 percent in the first quarter on a construction boom fueled by government stimulus policies, it said.

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Slowing global demand and a retreat from stimulus policies led to a weakening in China's manufacturing in June for a third month, surveys showed Thursday. The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, fell to...
China,Manufacturing,Export,Demand
378
2010-13-01
 

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