HINA?S manufacturing decelerated further in August while construction and services grew at a slow rate, according to two surveys Monday, adding to conflicting signals about whether the country?s slowdown is bottoming out.
HSBC Corp said its purchasing managers? index fell to 47.6 from July?s 49.3 on a 100-point scale on which numbers below 50 represent a contraction. It was the tenth month of decline and the lowest reading since more than three years ago in March 2009. Manufacturing companies shed jobs at their fastest rate in 41 months, HSBC said. New orders and export orders also declined. ?Beijing must step up policy easing to stabilise growth and foster job market conditions,? HSBC?s China economist, Hongbin Qu, said in a statement.
Also Monday, the National Bureau of Statistics said its index of non-manufacturing activity rose to 56.3 from July?s 55.6. A sub-index for construction activity rose to 61.1 from July?s 60.4. The index also covers industries such as air travel and telecommunications. China?s economic growth fell to a three-year low of 7.6% in the second quarter. Analysts expect a rebound by early next year but corporate profits and other indicators have fallen despite government stimulus measures. Beijing has cut interest rates twice since early June and is pumping money into the economy through higher investment by state companies. Authorities have resisted calls for more aggressive measures after the huge stimulus in response to the 2008 global crisis fueled inflation and a wasteful building boom.
Euro area manufacturing shrinks more than estimated
Euro-area manufacturing contracted more than initially estimated in August, suggesting the economy may struggle to avoid a recession in the third quarter. A gauge of manufacturing in the 17-nation euro area based on a survey of purchasing managers was revised lower to 45.1 from the reading of 45.3 estimated earlier, London-based Markit Economics said. The index, which stood at 44 in July, has held for 13 months below 50, indicating contraction.
European manufacturers are feeling the impact of the sovereign-debt crisis and tougher austerity measures that have undermined export and consumer demand. Euro-area economic confidence fell to a three-year low and inflation accelerated to 2.6% in August. The jobless rate held at a record 11.3% in July.
?The euro-zone manufacturing sector remains firmly in contraction territory,? Rob Dobson, senior economist at Markit, said in the report. ?The sector is on course to act as a drag on gross domestic product in the third quarter.? The euro-area economy may shrink 0.1% this year, according to European Central Bank forecasts. The ECB will publish updated economic projections next week.
?The uncertainty and cost-caution resulting from the currency union?s ongoing political and debt crises are now being reinforced by softer global economic growth,? Dobson said. ?The euro-zone product and labor markets are unlikely to show any real sustained improvement until regional structural issues are addressed and the broader global backdrop brightens.?
In China, manufacturing slowed further in August, surveys of purchasing managers showed on Sept. 1 and today, with one gauge at the lowest level since March 2009. A manufacturing PMI released today by HSBC Holdings Plc and Markit Economics was at 47.6, indicating the fastest contraction in more than three years.
UK manufacturing data beat expectations
UK manufacturing rebounded more than economists forecast in August as output barely contracted, adding to the case for Bank of England policy makers to refrain from injecting further stimulus into the economy. A gauge based on a survey of purchasing managers surged to 49.5 from 45.2 in July, Markit Economics and the Chartered Institute of Purchasing and Supply said in London. Economists had forecast an increase to 46.1, according to the median of 28 estimates in a Bloomberg News survey. A reading below 50 indicates contraction.
The Bank of England will maintain its quantitative-easing program this week as officials assess the impact of their bond purchases and measures to boost credit. The central bank cut its economic forecasts last month amid the continuing debt turmoil in the euro area, where a report today showed factory output shrank more than initially estimated in August. The UK report ?reinforces belief that the BOE is highly likely to keep all aspects of monetary policy unchanged? this week, said Howard Archer, an economist at IHS Global Insight in London. ?Nevertheless, further QE remains very much on the cards for the fourth quarter.?
Producers of consumer goods increased output last month and a ?severe decline? in new orders caused by Europe?s debt turmoil eased to a ?broad stagnation,? Markit and CIPS said. While manufacturers saw inflows of new work hold broadly steady in August, this followed four consecutive months of contraction. The rate of decline in new export orders also eased sharply and manufacturing employment increased for a second month. Factories continued to raise their average selling prices, reflecting efforts to recover some of the margin lost earlier in the year.
Markit?s index of UK construction companies due to be published tomorrow may show the industry stagnated last month, while a services measure on Sept. 5 may show growth accelerated, economists said in separate polls.
The Confederation of British Industry and the British Chambers of Commerce both urged the government to take measures to stimulate growth last week as they forecast the economy will contract this year.
