Mon, May 01, 2017 - Page 14 News List

China manufacturing growth slows

‘LITTLE IMPROVEMENT’:Sharp declines in iron ore and onshore steel prices point to some of the pressures the country’s manufacturers are facing, an economist said

Reuters, BEIJING

Growth in China’s manufacturing sector last month slowed faster than expected, an official survey showed yesterday, as producer price inflation cooled and policymakers’ efforts to reduce financial risks in the economy weighed on demand.

The Chinese National Bureau of Statistics’ official purchasing managers’ index (PMI) last month fell to a six-month low of 51.2 from March’s near five-year high of 51.8.

Analysts polled by Reuters had predicted a reading of 51.6, the ninth straight month above the 50-point mark that separates growth from contraction on a monthly basis.

Demand weakened across the board with the biggest decline in the input price sub-index, which fell to 51.8, its slowest expansion since June last year, from 59.3 in March.

Sharp declines in iron ore and onshore steel prices point to some of the pressures the country’s manufacturers are facing, said Zhou Hao (周浩), an economist at Commerzbank AG in Singapore.

“We believe that this on one hand reflects that there is little improvement in underlying demand,” Zhou wrote in a note. “On the other hand, the deleveraging effort by the Chinese authorities, has started to work.”

The employment sub-index slipped to 49.2 from 50 in March while the raw materials inventories sub-index was unchanged at 48.3.

Growth in China’s services sector slowed slightly to 54 last month, compared with the previous month’s reading of 55.1, which was the highest since May 2014.

China’s economy grew a faster-than-expected 6.9 percent in the first quarter of this year, boosted by higher government infrastructure spending and the nation’s gravity-defying property boom.

However, growth is expected to slow as authorities step up a battle to cool the property sector, and as the central bank and banking regulator take steps to contain financial risks.

Some analysts say China’s economic growth might have peaked in the first quarter, but that it is on track to hit a target of about 6.5 percent this year.

China’s producer price inflation in March cooled for the first time in seven months as iron ore and coal prices tumbled, while property sales growth slowed in the first quarter, despite robust property investment.

The private sector Caixin/Markit PMI manufacturing survey, which focuses more on small and mid-sized firms, is to be published tomorrow.

The Caixin/Markit PMI is expected to come in at 51 for last month, according to a Reuters poll of economists, down from 51.2 in March.

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