China manufacturing slows to 12-month low: HSBC Posted April 23, 2015 15:15:30 A leading private sector index shows Chinese manufacturing has slowed to 12-month low due to falling domestic demand. The HSBC China Manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in April, down from 49.6 in March, with a reading below 50 showing the sector losing momentum. It is the lowest level in a year and HSBC greater China economist Julia Wang said it is due to weakness in domestic demand. "Despite the recent property easing measures as well as strong bank lending supporting infrastructure investment, domestic demand decelerated further," she said. On Sunday, China announced a 100-basis-point lowering of its banks' reserve requirements, which could free up more than $US200 billion in extra lending. However, Julia Wang said that further policy easing is likely to be necessary to kick-start a slowing economy. "This warrants a more aggressive monetary policy and, in particular, would justify cuts to the policy rate in order to bring down the cost of borrowing to a more sustainable level," she argued. "We forecast the PBoC [People's Bank of China - the central bank] to cut its policy rate by 25 basis points within the second quarter, and an additional 25-basis-point cut in the third quarter." Highlighting the domestic nature of the slowdown, Chinese manufacturing exports have actually improved over the past three months, with the export orders index up from 48.5 in February to 50.6 now. In a worrying sign of the stubbornness of the slowdown, new orders fell from 49.8 to 49.2, indicating that future demand is likely to remain soft over the coming months. Output prices also fell to 46.8 from 47.3, highlighting China's drift towards deflation.

China manufacturing slows to 12-month low: HSBC

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China manufacturing slows to 12-month low: HSBC

Posted April 23, 2015 15:15:30

A leading private sector index shows Chinese manufacturing has slowed to 12-month low due tofalling domestic demand.

The HSBC China Manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in April, down from49.6 in March, with a reading below 50 showing the sector losing momentum.

It is the lowest level in a year and HSBC greater China economist Julia Wang said it is due toweakness in domestic demand.

"Despite the recent property easing measures as well as strong bank lending supportinginfrastructure investment, domestic demand decelerated further," she said.

On Sunday, China announced a 100-basis-point lowering of its banks' reserve requirements, whichcould free up more than $US200 billion in extra lending.

However, Julia Wang said that further policy easing is likely to be necessary to kick-start a slowingeconomy.

"This warrants a more aggressive monetary policy and, in particular, would justify cuts to the policyrate in order to bring down the cost of borrowing to a more sustainable level," she argued.

"We forecast the PBoC [People's Bank of China - the central bank] to cut its policy rate by 25 basispoints within the second quarter, and an additional 25-basis-point cut in the third quarter."

Highlighting the domestic nature of the slowdown, Chinese manufacturing exports have actuallyimproved over the past three months, with the export orders index up from 48.5 in February to 50.6now.

In a worrying sign of the stubbornness of the slowdown, new orders fell from 49.8 to 49.2, indicatingthat future demand is likely to remain soft over the coming months.

Output prices also fell to 46.8 from 47.3, highlighting China's drift towards deflation.