China manufacturing slips in June, but 9-month growth run sustained
CHINA's purchasing managers' index (PMI) fell to 50.1 in June from 50.8 in May while the new orders dropped to 50.4 in May and to 47.7 in June, according to the China Federation of Logistics and Purchasing (CFLP).
But the CFLP PMI also showed a ninth consecutive month of overall growth since the index fell below 50 last September though the HSBC index that focuses on smaller private companies was less optimistic.
New export orders also fell to 44.9 from 48.9 as purchases from Europe and the US declined, reported Newark's Journal of Commerce. The PMI data also revealed that manufacturing in China fell to a nine-month low of 48.2 in June, down from 49.2 in May.
Manufacturers blamed a credit shortage for declines as Beijing deployed tightened money supply to cool a period of loose lending getting out of control. This, coupled with China's new Xi Jinping government's decision to forge an economy that is less export dependent.
"As Beijing refrains from using stimulus, the ongoing growth slowdown is likely to continue in the coming months," said HSBC economist Hongbin Qu.
Said IHS senior economist Xianfang Ren: "The economy is in sharp distress - the buy-up price index collapsed in April and now is still below 45, and the purchased goods inventory has been under 50 for five months."
Said Nomura analyst Wendy Chen: "We expect the official PMI to drop below 50 in July as policy tightening continues to affect the economy. The weak PMI reinforces our view that there is a 30 per cent chance that GDP growth may drop below seven per cent in Q3 or Q4."
HSBC has revised its forecast for GDP growth in China this year to 7.4 per cent from 8.2 per cent. Indeed, some analysts now expect economic output growth to fall below seven per cent in the second half of this year after slowing to 7.7 per cent in the first quarter from 7.9 per cent in the previous quarter.
CHINA's purchasing managers' index (PMI) fell to 50.1 in June from 50.8 in May while the new orders dropped to 50.4 in May and to 47.7 in June, according to the China Federation of Logistics and Purchasing (CFLP).
But the CFLP PMI also showed a ninth consecutive month of overall growth since the index fell below 50 last September though the HSBC index that focuses on smaller private companies was less optimistic.
New export orders also fell to 44.9 from 48.9 as purchases from Europe and the US declined, reported Newark's Journal of Commerce. The PMI data also revealed that manufacturing in China fell to a nine-month low of 48.2 in June, down from 49.2 in May.
Manufacturers blamed a credit shortage for declines as Beijing deployed tightened money supply to cool a period of loose lending getting out of control. This, coupled with China's new Xi Jinping government's decision to forge an economy that is less export dependent.
"As Beijing refrains from using stimulus, the ongoing growth slowdown is likely to continue in the coming months," said HSBC economist Hongbin Qu.
Said IHS senior economist Xianfang Ren: "The economy is in sharp distress - the buy-up price index collapsed in April and now is still below 45, and the purchased goods inventory has been under 50 for five months."
Said Nomura analyst Wendy Chen: "We expect the official PMI to drop below 50 in July as policy tightening continues to affect the economy. The weak PMI reinforces our view that there is a 30 per cent chance that GDP growth may drop below seven per cent in Q3 or Q4."
HSBC has revised its forecast for GDP growth in China this year to 7.4 per cent from 8.2 per cent. Indeed, some analysts now expect economic output growth to fall below seven per cent in the second half of this year after slowing to 7.7 per cent in the first quarter from 7.9 per cent in the previous quarter.