Tuesday, September 4, 2012

China manufacturing weakens, services grow

(AP) ? China'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 stabilize 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 percent 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.

Weak corporate profits are likely to hurt investment, a key pillar of Beijing's recovery plan, meaning the government might have to step up its own spending, analysts say.

The Cabinet minister in charge of China's planning agency said last week that growth was "stabilizing at a slow pace" but gave no details or a time frame for a recovery.

Premier Wen Jiabao and other officials have promised more support for struggling exporters but there is little Beijing can do to boost foreign demand amid Europe's debt crisis and a sluggish U.S. recovery.

A separate survey released Saturday by the government-authorized China Federation of Logistics and Purchasing also showed August manufacturing weakening. The group's PMI fell to 49.2 points ? its lowest level to date ? from July's 50.1.

___

HSBC Corp.: www.hsbc.com

National Bureau of Statistics (in Chinese): www.stats.gov.cn

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-09-03-AP-AS-China-Economy/id-8e0c912e7c3f457a90708ff539d4d915

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