China’s manufacturing activity continued to shrink this month, HSBC said yesterday, as economic strife in the key European and US markets hobbled demand for the nation’s goods.
The final HSBC purchasing managers’ index (PMI) reached 48.7 this month, slightly better than the 47.7 for last month, but lower than preliminary PMI of 49 released earlier this month, as new orders dropped.
A reading above 50 indicates expansion, while a reading below 50 suggests a contraction.
While the figures are a slight improvement, the data adds to mounting evidence export-driven China is slowing and will ratchet up pressure on Beijing to further loosen monetary policies to prevent a painful hard landing.
Manufacturing activity contracted last month for the first time in 33 months, while consumer prices rose at their slowest pace in more than a year and industrial output growth hit its lowest level since 2009.
“Weakening external demand is starting to bite,” HSBC chief economist Qu Hongbin (屈宏斌) said in a statement. “This, plus the ongoing property market corrections, adds to calls for more aggressive action on both fiscal and monetary fronts to stabilize growth and jobs, especially with prices easing rapidly. Hard landings should be avoided so long as easing measures filter through in the coming months.”
China’s export growth declined last month for a third month, falling to 13.8 percent from the 15.9 percent the previous month.
The slump in global demand has battered export-driven southern coastal regions, where thousands of small companies have been driven out of business and the survivors have laid off tens of thousands of workers.
Smaller private companies were hard hit by bank lending curbs imposed to cool inflation and a boom in housing prices. The government has promised to have state banks lend more to help struggling entrepreneurs, but says most of its curbs will remain in place.