Growth in China’s vast factory sector slowed to a three-month low in August as output and new orders moderated, a preliminary private survey showed yesterday, heightening concerns about increasing softness in the economy.
The tepid reading came as China’s economic growth appears to be faltering again, with recent indicators, ranging from lending to output and investment, all pointing to weakness.
With conditions looking increasingly unsteady, analysts have said more stimulus may be needed in the coming months to bolster growth and offset the downdraught from the cooling housing market.
The HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index (PMI) fell to 50.3 from July’s 18-month high of 51.7.
It was the lowest reading since May, though the PMI stayed above the 50-point level that separates growth in activity from contraction for a third consecutive month.
“Today’s data suggests the economic recovery is still continuing, but its momentum has slowed again,” said Mr Qu Hongbin, chief economist for China at HSBC.
“We think more policy support is needed to help consolidate the recovery. Both monetary and fiscal policy should remain accommodative until there is a more sustained rebound in economic activity,” added Mr Qu.
A HSBC/Markit sub-index measuring new orders, a gauge of demand at home and abroad, fell to a three-month low of 51.3. The sub-index for output also dropped to a three-month low in August.
The PMI survey showed that employment had fallen at a faster pace than last month, indicating more layoffs in manufacturing, which could begin to erode consumer confidence.
Any marked weakening in the labour market would raise alarm bells for China’s leaders, who regard healthy employment levels as a top policy priority and an important condition for social stability.
Source: Reuters
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