Tuesday, November 2, 2010

Chinese manufacturing falls as govt. cools overheating

A purchasing managers’ index (PMI) from HSBC and analysts Markit revealed a fall to 49.4 from 50.4 in June. Some economists said this was likely to continue into the autumn as the Chinese authorities work to prevent the economy overheating and property prices running out of control.
Commodity prices, which had recovered in recent weeks from a 25% fall in May, were expected to decline as demand from Chinese manufacturers fell. A slowdown in other major economies including the US and Japan is also expected to dampen demand for oil, copper and other commodities.
A manufacturing index backed by the Chinese government showed the slowest expansion in manufacturing in 17 months in July. The index, released by the statistics bureau and the China Federation of Logistics and Purchasing, slid to 51.2, the lowest level in 17 months.
“There is no need to panic,” said Qu Hongbin, a Hong Kong-based economist at HSBC, repeating his assessment of last month that China is having a “slowdown not a meltdown”.
China’s more moderate expansion is still expected to foster full-year growth of 9.5%, up from 9.1% in 2009, although it needs to grow at least 6% to 7% to keep up with population growth.
HSBC’s manufacturing survey covers more than 400 companies and is weighted more toward smaller, privately owned business than the government’s PMI, according to the bank. The PMI released by the logistics federation and the Beijing-based National Bureau of Statistics covers more than 730 companies.
Morgan Stanley economist Wang Qing told Bloomberg that a government campaign to close energy-inefficient businesses is likely to have contributed to a slowdown in heavy industry.
A slowdown in growth in South Korea and Taiwan underscored how Beijing’s efforts to curb a property price boom have affected the rest of Asia, where export industries have been driven by Chinese demand.
China's manufacturing contracted for the first time in 16 months in July following a clampdown by the government on property speculation and tighter credit controls.
A purchasing managers' index (PMI) from HSBC and analysts Markit revealed a fall to 49.4 from 50.4 in June. Some economists said this was likely to continue into the autumn as the Chinese authorities work to prevent the economy overheating and property prices running out of control.
Commodity prices, which had recovered in recent weeks from a 25% fall in May, were expected to decline as demand from Chinese manufacturers fell. A slowdown in other major economies including the US and Japan is also expected to dampen demand for oil, copper and other commodities.
A manufacturing index backed by the Chinese government showed the slowest expansion in manufacturing in 17 months in July. The index, released by the statistics bureau and the China Federation of Logistics and Purchasing, slid to 51.2, the lowest level in 17 months.
"There is no need to panic," said Qu Hongbin, a Hong Kong-based economist at HSBC, repeating his assessment of last month that China is having a "slowdown not a meltdown".
China's more moderate expansion is still expected to foster full-year growth of 9.5%, up from 9.1% in 2009, although it needs to grow at least 6% to 7% to keep up with population growth.
HSBC's manufacturing survey covers more than 400 companies and is weighted more toward smaller, privately owned business than the government's PMI, according to the bank. The PMI released by the logistics federation and the Beijing-based National Bureau of Statistics covers more than 730 companies.
Morgan Stanley economist Wang Qing told Bloomberg that a government campaign to close energy-inefficient businesses is likely to have contributed to a slowdown in heavy industry.
A slowdown in growth in South Korea and Taiwan underscored how Beijing's efforts to curb a property price boom have affected the rest of Asia, where export industries have been driven by Chinese demand.
India bucked the trend, with its manufacturing PMI rising slightly for a 16th straight month.

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