Tags: AS | China | Manufacturing

China Factory Activity Slips again as Slowdown Weighs

Friday, 01 July 2016 04:40 AM

HONG KONG (AP) — Chinese manufacturing deteriorated again last month, according to surveys released Friday, underscoring how a weak global outlook is challenging Beijing's efforts to revive growth in the world's No. 2 economy.

An official survey of factory purchasing managers at mostly larger, state-owned enterprises ticked down to 50.0 in June from 50.1 the month before.

The latest reading on the Chinese Federation of Logistics & Purchasing's survey sits right on the midpoint of the 100-point scale, indicating activity neither rose nor fell from the month before. Numbers above 50 signal expansion.

A separate survey painted a more pessimistic picture of conditions in China's manufacturing sector, which employs many millions of workers and is a key part of the overall economy.

The Caixin/Markit index, which focuses on smaller, private enterprises, contracted further, slipping to 48.6 last month from 49.2 in May as production shrank at the quickest pace in four months.

The surveys are widely watched for insights on the health for the Chinese economy, which last year posted its slowest rate of growth in a quarter century and is forecast to slow further this year. Export demand has been hobbled by a weak global outlook, which has been compounded by turmoil over Britain's surprise vote last week to leave the European Union, dubbed Brexit.

"It's noteworthy that the current domestic market demand remained weak as real economic momentum is still insufficient," said Zhao Qinghe, an analyst at the National Bureau of Statistics.

Zhao blamed recent weakness in manufacturing on a host of factors, including feeble world economic growth, expectations for a U.S. interest rate hike, protectionism in Europe and the U.S., and Britain's EU vote.

The data raise hopes policymakers in Beijing will unleash further growth-boosting measures.

"Brexit presents a new risk to China's external demand and challenges China's manufacturing sector in (the first half of 2016)," ANZ Bank analysts Raymond Yeung and David Qu said in a report, adding they expect Beijing to react with stimulus moves such as higher infrastructure investment or more interest rate cuts.

Also Friday, an official survey of non-manufacturing activity picked up pace, rising to 53.7 last month from 53.1 previously, underscoring how the service industry is offsetting manufacturing's slump.

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Chinese manufacturing deteriorated again last month, according to surveys released Friday, underscoring how a weak global outlook is challenging Beijing's efforts to revive growth in the world's No. 2 economy.An official survey of factory purchasing managers at mostly...
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2016-40-01
Friday, 01 July 2016 04:40 AM
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