Friday, August 24, 2012

China Manufacturing Shrinks: "Struggling with strong global headwinds"

The HSBC China Manufacturing Flash Purchasing Managers' Index, compiled by Markit, decreased -1.5 to 47.8 in August, a 9-month low. A contraction was expected and ongoing slowdowns are projected. This is the 10th consecutive month below 50, which indicates contraction.

The reading is just 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 13 of the past 14 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, intermediate, and long-term trends are now decreasing. The PMI is a percentage - not a total.

Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, said: "Falling orders dragged down the August flash PMI to a nine-month low, suggesting Chinese producers are still struggling with strong global headwinds. 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".

The HSBC Flash China Manufacturing Purchasing Managers’ Index™ (PMI™) is published on a monthly basis approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The estimate is typically based on approximately 85%–90% of total PMI survey responses each month and is designed to provide an accurate indication of the final PMI data.


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