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China's manufacturing contracts again but at a smaller rate

English.news.cn   2012-10-01 13:22:20            

BEIJING, Oct. 1 (Xinhua) -- China's manufacturing activity continued to contract in September but the rate of deterioration eased slightly than in the previous month, official data showed Monday.

The official purchasing managers' index (PMI), released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP), improved to 49.8 percent last month from 49.2 percent in August. However, it remained below the 50-percent threshold that divides expansion from contraction.

The Sept. index ended the manufacturing PMI's continuous decline for four straight months. The index fell below the boom-bust line in August for the first time since November 2011.

"The rebound in Sept. confirms a trend that China's economy is bottoming out," said Zhang Liqun, an analyst with the Development Research Center of the State Council, a government think tank.

Judging by the reading of sub-indices, Zhang said there will be a turnaround for the downward movement in the world's second-largest economy, and growth may pick up in the coming months.

China's official PMI figures followed the final reading of a privately-compiled survey by the HSBC on Sept. 29, which put the Sept. PMI for Chinese manufacturers at 47.9 percent, up from 47.6 percent in August.

Sub-index for new orders climbed 1.1 percentage points from August to 49.8 percent last month, while the output sub-index for Sept. stood at 51.3 percent, up 0.4 percentage point from the previous month.

New export orders rose sharply to 48.8 percent, up 2.2 percentage points from August, implying an improvement in external demand.

However, the employment sub-index eased to 48.9 percent in September from 49.1 percent in August.

Improvements in the overall factory activity and some PMI sub-indices mean the country's pro-growth measures are starting to take effect, which will lay a good foundation for the fourth-quarter growth, said Cai Jin, CFLP vice chairman.

The country's economy rose 7.6 percent in the second quarter of the year, the slowest rate in more than three years after the global financial crisis.

To buoy the slowing economy, the Chinese government has rolled out an array of measures this year, including two cuts to benchmark interest rates, the easing of bank reserve requirements and the approval of infrastructure projects worth more than one trillion yuan (157.73 billion U.S. dollars).

Gross domestic product (GDP) figures for the third quarter are scheduled to be released on Oct. 18.

Liu Ligang, an economist with the ANZ National Bank Ltd., expected third-quarter GDP growth to fall below the government's annual target of 7.5 percent, indicating an increasing chance for more interest rate cuts as current monetary loosening was not strong enough to reboot growth.

The central bank may soon lower banks' reserve requirement ratios again as the money markets will see a massive 650 billion yuan in maturing reverse repurchase agreements (repos) in October, which draw liquidity, Liu said.

The People's Bank of China pumped a record 470 billion yuan into money markets via reverse repos last week in an effort to ease a short-term cash crunch toward the quarter's end and the long holiday. These contracts will mature this month.

The country's Shanghai and Shenzhen stock markets both closed for trading from Sept. 29 to Oct. 7 for the Mid-Autumn Festival and the National Day holidays.

The key Shanghai index has fallen more than 15 percent from its peak this year over concerns about a deepening slowdown in the national economy.

Editor: Wang Yuanyuan
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