China's manufacturing activity slows to 11-month low
China's manufacturing activity fell to an 11-month low in July, hurt
by a decline in new orders, according to a preliminary survey by HSBC.
The bank's Purchasing Managers' Index (PMI) fell to 47.7 from 48.2 in
June.
The PMI is a key indicator of activity in the sector and a reading
below 50 shows contraction. This is the third month in a row that the
HSBC reading has been below that level. The data came amid fears of a
slowdown in China's overall economy.
Data released earlier this month showed that China's economic growth
slowed in the April to June period, the second straight quarter of
weaker expansion.
The world's second biggest economy grew by 7.5% compared to the
previous year, down from 7.7% in the January to March period.
"The fall in the index is in line with our view of growth momentum
fading further in the coming quarters," the survey noted.
China's manufacturing and export sectors have been key drivers of its
economic growth over the past decades. However, demand for China's
exports has slowed recently, especially from key markets such as the US
and Europe as they grapple with slowing economic growth.
At the same time, policymakers have found it tough to boost domestic
consumption enough to offset the decline in foreign sales.
That has led to concerns that a slowing demand from key markets
coupled with a subdued domestic consumption may hurt growth in China's
manufacturing sector and impact China's overall economic growth.
Chief 'China' economist at HSBC, Hongbin Qu that weaker new orders
played a role in a slowdown in manufacturing activity in July.
An economist with Nomura, Zhiwei Zhang said, "The fall in the index
is in line with our view of growth momentum fading further in the coming
quarters. Zhang said that he expects China's growth to slow to an annual
rate of 7.4% in the current quarter and 7.2% in the final quarter of the
year.
BBC
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