Wednesday, June 13, 2012

China Manufacturing Contracts for 7th Consecutive Month: "Weakening Demand"

The HSBC China Manufacturing Purchasing Managers' Index, compiled by Markit, decreased -0.9 to 48.4 in May, negating last month's gain. This is the 7th consecutive month below 50, which indicates contraction. The reading is above the 32-month low of 47.7 in November 2011. An index reading above 50 indicates an overall increase in manufacturing. The China Manufacturing PMI has been just below 50 for 10 of the past 11 months.

China Manufacturing PMI Manufacturing began contracting, an Index reading of less than 50, in July 2011. The chart peak was 55.3 in November 2010. The short and long-term trends (3 and 12 months) continue downward. The intermediate-term trend (6 months) has begun increasing. The PMI is a percentage - not a total.

Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC, said: "May’s final reading confirmed that manufacturing growth slowed further on weakening demand from both global and domestic markets. This points to a continuous slowdown of the real economy in 2Q and should promote Beijing to step up easing efforts in the coming months. On top of monetary easing via additional RRR cuts and one 25bp rate cut, Beijing policy makers should allow fiscal measures and private investment to play a bigger role in supporting growth."

No comments:

Post a Comment

Seeking Alpha