Chinese Manufacturing Index Slows

Chinese Manufacturing Index Slows

Expansion of Chinese manufacturing activity slowed in July, according to an independent survey and a Chinese government report.

The HSBC China Manufacturing Purchasing Managers’ Index fell to 49.4 last month from 50.4 in June – its first drop below 50 since March 2009. Numbers above 50 show manufacturing activity expanding.

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"This suggests that manufacturing production growth continued to decelerate last month, reflecting the combined effect of credit tightening, property cooling measures and Beijing's measures to cut capacity in energy-intensive sectors," said Qu Hongbin, HSBC chief China economist.

Qu said China is still expected to maintain growth of around 9 percent despite the slowdown, thanks to huge infrastructure spending and resilient private consumption.

The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, fell to 51.2 in July from 52.1 in June. The index has remained above 50 for 17 straight months after slowing in late 2008 and early 2009. It was 53.9 in May and 55.7 in April.

Areas such as production, new orders and purchasing prices all declined, according to a summary of the survey posted on the federation's website. Meanwhile, the employment index was up.

The slowdown was expected because of government efforts to slow the rise in real estate prices and the slowing of government-backed stimulus spending on construction and other projects. Economic growth slowed to 10.3 percent over a year earlier in the second quarter, down from its 11.9 percent pace in the first quarter.

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