China's manufacturing declines, but at slower pace

[September 29, 2012]  BEIJING (AP) -- Chinese manufacturing contracted for the 11th straight month in September amid a fall in new orders, though the decline might be easing, a business survey showed Saturday.

HSBC Corp.'s purchasing managers' index, based on a survey of more than 400 companies, was 47.9 for September, slightly up from 47.6 in August. The index measures manufacturing activities on a 100-point scale on which numbers below 50 show a contraction.

HSBC said Chinese manufacturing declined again in September, as new export orders fell at the sharpest rate in 42 months amid weak international demand. Its employment index also fell further, likely because of reduced production levels.

HSBC's China economist Hongbin Qu said in an accompanying statement that "the sharper contraction of new export orders and the lingering pressures on job markets mean that Beijing should step up easing to support growth and employment."

He said that Chinese manufacturing growth was likely bottoming out and that fiscal measures should play a more important role in the coming months.

China's economic growth fell to a three-year low of 7.6 percent in the second quarter. Beijing has cut interest rates twice since June 1 and is pumping money into the economy by encouraging investment by state companies. But authorities are moving cautiously in reversing the economic slump, after China's huge stimulus in response to the 2008 crisis fueled inflation and a wasteful building boom.

[Associated Press]

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