Tags: China | Manufacturing | beijing | slowdown

Survey Shows China Manufacturing Contracting

Monday, 01 October 2012 07:28 AM

China's manufacturing contracted again in September but improved from the previous month in a possible sign an economic slowdown is bottoming out.

An industry group, the China Federation of Logistics & Purchasing, said Monday its monthly purchasing managers' index stood at 49.8 points on a 100-point scale on which numbers below 50 indicate a contraction. That was up 0.6 points from August's numbers and the first improvement in four months.

The data added to signs China's deepest economic downturn since the 2008 global crisis might be stabilizing but officials including President Hu Jintao have warned conditions might deteriorate further before growth rebounds.

China's economic growth fell to a three-year low of 7.6 percent in the quarter ending in June. That is strong by Western standards but has hurt Chinese manufacturers and construction companies that depend on high growth.

Analysts are forecasting a turnaround late this year or in early 2013 but have pushed back their time frame due to weakness in key European and U.S. export markets. They say a Chinese recovery is likely to be too weak to drive a global rebound without improvement in developed economies.

Some forecasters point to higher bank lending in recent months as a sign of an impending uptick in growth but other indicators have yet to show improvement.

A separate PMI released Saturday by HSBC Corp. showed activity rose slightly to 47.9 on a similar 100-point scale, still showing a contraction but improved from August's 47.6.

China's slowdown is due largely to government lending and investment curbs imposed to cool inflation and steer rapid growth to a more manageable level, but the country also has been hurt by the unexpectedly sharp decline in export demand.

The government has cut interest rates twice since June and is pumping money into the economy through higher investment by state companies and more spending on building subways and other public works. But authorities are moving more cautiously than they did after the 2008 crisis, when the huge stimulus that helped China rebound also fueled inflation and a wasteful building boom.

The logistics federation said the production component of its index improved to 51.3, up 0.4 points from August. It said clothing, auto manufacturing, food-processing, electronics and some other industries showed activity expanding. Steel production, metal fabrication and equipment manufacturing contracted.

New export orders rose 2.2 points from August's level to 48.8, though that still showed a contraction.

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China's manufacturing contracted again in September but improved from the previous month in a possible sign an economic slowdown is bottoming out.
Monday, 01 October 2012 07:28 AM
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