Chinese Manufacturing Shrinks In December (Updated)
China’s manufacturing shrank for a third month in December as export demand fell, suggesting an economic slump is worsening despite government efforts to shield the country from global turmoil, according to data reported Sunday.
A key indicator, the Purchasing Managers Index, edged up from November’s all-time low but stood at 41.2, below the 50 level that shows activity is shrinking, the government-sanctioned China Federation of Logistics and Purchasing said.
Manufacturing is about 40 percent of China’s economic output, and a drop in demand for its exports has triggered thousands of factory closures. That has prompted protests by laid-off workers, and communist leaders worry more job losses could fuel unrest.
Update: A Reuters report on the same statistics has a slightly more optimistic tone:
“This month’s PMI shows that the Chinese economy continues to lose momentum, but there are signs of it hovering around a bottom,” said Zhang Liqun, a government economist who comments on the official survey for the logistics federation.
“As the adjustment in stocks of goods starts to taper off and macroeconomic policies start to show results, the slowdown in growth will probably become less pronounced in the future.”
But another report on China’s PMI matched reports from other countries around the world, demonstrating that the global manufacturing sector is in bad shape. From the New York Times:
In China, the purchasing managers’ index by the brokerage firm CLSA showed the manufacturing sector had contracted for a fifth consecutive month. The survey showed the steepest decline in its history.
With five back-to-back purchasing index readings signaling contraction, “the manufacturing sector, which accounts for 43 percent of the Chinese economy, is close to technical recession,” said Eric Fishwick, head of economic research at CLSA in Hong Kong, in a note with the release.
The data added to the flood of statistical evidence from across the Asia-Pacific region showing that activity was slowing faster than previously thought as demand withers in the United States and Europe.