China’s manufacturing activity fell to a nine-month low this month as firms struggled with global woes, providing further impetus for Beijing to beef up economic stimulus efforts, HSBC said yesterday.
Preliminary figures from the British banking giant’s closely watched purchasing managers’ index (PMI), which gauges nationwide manufacturing activity, hit 47.8 this month, the lowest since November last year, HSBC said in a statement.
A PMI reading above 50 indicates expansion, while a reading below 50 points to contraction.
The preliminary result, down from a final reading of 49.3 last month, showed that Chinese manufacturers are still wrestling with declining overseas demand amid the slowing global economy, said Qu Hongbin (屈宏斌), a Hong Kong-based economist with HSBC.
“Falling orders dragged down the August flash PMI to a nine-month low, suggesting Chinese producers are still struggling with strong global headwinds,” he said in the statement.
New export business declined at its sharpest rate since March 2009, HSBC said, without giving a figure.
“To achieve the stated policy goal of stabilizing growth and the jobs market, Beijing must step up policy easing to lift infrastructure investment in the coming months,” Qu said.
HSBC will release the final PMI for this month on Sept. 3.
“Weak PMIs will likely put more pressure on the People’s Bank of China to loosen monetary policy by cutting the reserve requirement ratio,” said Zhang Zhiwei (張智威), an economist with Nomura International in Hong Kong.
China’s economy grew 7.6 percent in the second quarter of this year, its slowest pace in more than three years. Authorities have cut interest rates and lowered reserve requirements for banks in a bid to spur lending to prop up the economy.
This week, China’s central bank injected a net 278 billion yuan (US$43.8 billion) into the money market through its open-market operations, Dow Jones Newswires reported yesterday.