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Early Survey Shows Contraction in Chinese Manufacturing Early Survey Shows Contraction in Chinese Manufacturing
(34 minutes later)
HONG KONG — The Chinese manufacturing sector contracted in May, a poll released on Thursday showed, offering the latest evidence that the Chinese economy is unlikely to pick up steam again anytime soon.HONG KONG — The Chinese manufacturing sector contracted in May, a poll released on Thursday showed, offering the latest evidence that the Chinese economy is unlikely to pick up steam again anytime soon.
China’s once-sizzling economy has been slowing for the past couple of years, in part because global export demand has been tepid and in part because the authorities in Beijing have been trying to engineer a more gradual — but more balanced — pace of growth.China’s once-sizzling economy has been slowing for the past couple of years, in part because global export demand has been tepid and in part because the authorities in Beijing have been trying to engineer a more gradual — but more balanced — pace of growth.
Released by the British bank HSBC, the preliminary purchasing managers’ index slipped from 50.4 points in April to 49.6 points in May, the first time in seven months that it sagged below the level of 50, which separates contraction from expansion. Markets fell across Asia, with Nikkei 225-share index closing down 7.3 percent. Released by the British bank HSBC, the preliminary purchasing managers’ index slipped from 50.4 points in April to 49.6 points in May, the first time in seven months that it sagged below the level of 50, which separates contraction from expansion. Markets fell across Asia, with the Nikkei 225-share index closing down 7.3 percent.
“The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds,” Qu Hongbin, chief China economist at HSBC, said in a note accompanying the data release, adding that a likely slowdown this quarter cast a shadow over China’s fragile recovery.“The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds,” Qu Hongbin, chief China economist at HSBC, said in a note accompanying the data release, adding that a likely slowdown this quarter cast a shadow over China’s fragile recovery.
The pace of the slowdown in the past few months has taken many economists by surprise. Data released last month showing the economy grew by only 7.7 percent in the first quarter of this year, compared with a year earlier, was significantly below expectations for expansion of 8 percent, and prompted numerous analysts to cut their growth forecasts for China.The pace of the slowdown in the past few months has taken many economists by surprise. Data released last month showing the economy grew by only 7.7 percent in the first quarter of this year, compared with a year earlier, was significantly below expectations for expansion of 8 percent, and prompted numerous analysts to cut their growth forecasts for China.
Data for April, too, have been lackluster, and the manufacturing activity index released Thursday, which provided one of the earliest available glimpses into how the month of May is progressing, indicated that conditions are unlikely to pick up during the second quarter.Data for April, too, have been lackluster, and the manufacturing activity index released Thursday, which provided one of the earliest available glimpses into how the month of May is progressing, indicated that conditions are unlikely to pick up during the second quarter.
The reading “pretty much dashed” hopes of a recovery in growth in the second quarter, Yao Wei, China economist at Société Générale in Hong Kong, said in a note.The reading “pretty much dashed” hopes of a recovery in growth in the second quarter, Yao Wei, China economist at Société Générale in Hong Kong, said in a note.
The data, compiled by the research firm Markit, helped undermine market sentiment in Asia on Thursday.The data, compiled by the research firm Markit, helped undermine market sentiment in Asia on Thursday.
The Hang Seng index in Hong Kong and the Taiex in Taiwan both were down nearly 2 percent by midafternoon. In Singapore, the Straits Times index fell 0.6 percent, and in South Korea, the Kospi dropped 0.9 percent.The Hang Seng index in Hong Kong and the Taiex in Taiwan both were down nearly 2 percent by midafternoon. In Singapore, the Straits Times index fell 0.6 percent, and in South Korea, the Kospi dropped 0.9 percent.
The biggest loser in the region was Japan, where the Nikkei index reversed some of the big rally staged over the past few months on optimism that the economy-bolstering efforts of Prime Minister Shinzo Abe’s government.The biggest loser in the region was Japan, where the Nikkei index reversed some of the big rally staged over the past few months on optimism that the economy-bolstering efforts of Prime Minister Shinzo Abe’s government.