China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, according to a survey modeled on the U.S. Federal Reserve’s Beige Book.

The China Beige Book, through interviews of more than 2,000 company executives and bankers from Aug. 9 to Sept. 3, found limits to monetary easing after interest-rate cuts in June and July, with banks loosening credit while fewer companies are borrowing, according to a summary from CBB International LLC, the New York-based researcher that conducted the survey.

The findings build on economic data indicating manufacturing, trade and retail sales slowed in the third quarter, pointing to a seventh straight deceleration in growth and potentially the weakest annual expansion in 22 years. They contrast with the China Beige Book’s report for the previous period, which said it found a rebound not reflected in in official statistics and projected government data would reflect a pickup by “mid- to late summer.”

“The dramatic and unexpected worsening of the European crisis and slowing of America’s economy brought China’s export order growth to a near-standstill,” said Craig Charney, research director for the China Beige Book.

At the same time, the third-quarter report showed some trends continued “despite the overall growth slowdown,” including relatively faster growth in retailing and services, a recovery in the real estate market, and greater strength in poorer and more peripheral regions than coastal industrial areas, Charney said.

Manufacturing Survey

A separate survey last week from HSBC Holdings Plc and Markit Economics found China’s manufacturing may contract for an 11th straight month in September. Economists surveyed by Bloomberg News this month forecast growth would slow to 7.4 percent in the third quarter from 7.6 percent in the previous three months, based on the median estimate.

The China Beige Book said manufacturing was the area with the biggest declines in companies reporting higher revenue, down 20 percentage points to 43 percent, and higher output, down 15 points to 47 percent. Respondents expecting higher sales in six months dropped 18 points to 53 percent and those seeing declines doubled to 20 percent, CBB said.

Government data showed factory output rose 8.9 percent in August from a year earlier, down from 9.5 percent in June and 11.9 percent in March.

Retail Slowdown

Retailing growth also slowed in the third quarter from the three months through June, though by a smaller degree than manufacturing, according to the CBB report. Fifty-eight percent of respondents reported higher sales, down 10 percentage points from the second quarter, while 20 percent reported a drop, almost double the previous period. Optimism for higher sales in six months is down from last quarter, even as more than two- thirds of retailers expect an increase, compared with 11 percent see declines, China Beige Book said.

“Retailers’ outlook, if dimmer, is still the most optimistic,” CBB said. “This may reflect the long-awaited rebalancing to consumption” in the economy, the report said.

China’s statistics bureau said retail sales rose 13.2 percent in August from a year earlier, down from 13.7 percent in June and 15.2 percent in March.

“Inventories are rising in manufacturing and retailing, unlike last quarter, when they fell at factories and were stable in stores,” CBB said in its report.

Job Cuts

The slowdown is pushing more companies to cut jobs or halt hiring. The number of companies reporting net hiring gains this quarter fell nine percentage points to 32 percent, while those cutting employees rose to 20 percent from 13 percent, CBB said. Fewer companies than before said the supply of unskilled labor is increasing.

The proportion of respondents reducing wages more than doubled to 11 percent, including 30 percent of companies with falling revenue, CBB said.

The two interest-rate cuts and three reductions in banks’ reserve requirements may be failing to boost lending, according to the China Beige Book. Half of bankers reported greater credit availability at their branch, up 10 percentage points, while companies reporting borrowing dropped 9 points to 34 percent.

The report said a recovery in the real estate market was “slow but steady,” while the proportion of builders “in trouble is up despite higher overall revenues.” Forty-three percent of residential realtors said prices rose, up 7 percent from the previous three months, CBB said.