adminHSBC said its final purchasing managers’ index reading came in at 48,2 last month, down from 49,2 in May and the lowest since September. It was also weaker than the bank’s preliminary June figure of 48,3.
The index tracks manufacturing activity in China’s factories and workshops and is a closely watched gauge of the health of the economy. A reading below 50 indicates contraction, while anything above signals expansion. China’s official PMI also showed weakness, falling to 50,1 in June from May’s 50,8, mainly due to falls in output and new orders, according to the National Bureau of Statistics.
“Falling orders and rising inventories added pressure to Chinese manufacturers in June,” Hong Kong-based HSBC economist Qu Hongbin said in a statement.
A shortage of funds on the country’s interbank market for more than two weeks last month probably made it harder for smaller firms to borrow money, he said.
“As Beijing refrains from using stimulus, the ongoing growth slowdown is likely to continue in the coming months.”
The latest figures add fuel to concerns about the global economic powerhouse, which has shown signs of slowing growth this year.
“The magnitude of the PMI drop has shown that China’s overall economic activity has decelerated further,” said ANZ economists Liu Ligang and Zhou Hao in a research note.
Analysts said the recent liquidity squeeze, which saw the interest rates banks charge each other surge to record highs, has added to downside risks to economic growth.
Policymakers are expected to take measures to end the credit crunch to restore market confidence, they said. The squeeze eased last week after the central bank said it had offered funds to financial institutions and would continue to do so. It said liquidity was “ample” and the situation would gradually improve. – AFP.
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