China
August official factory PMI seen shrinking to three-year
low
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[August 26, 2015]
BEIJING (Reuters) - Activity in
China's manufacturing sector likely shrank at its fastest pace in three
years in August, a Reuters poll suggested, adding to signs of deepening
economic weakness which are shaking global financial markets.
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The official manufacturing Purchasing Managers' Index (PMI) is
forecast to edge down to 49.7, the weakest level since August 2012,
from 50 in July, according to the median forecast of 20 economists
in the poll.
A reading above 50 indicates an expansion in activity while one
below that points to a contraction on a monthly basis.
A separate private survey released last week revealed that China's
factory sector shrank at its fastest rate in almost 6-1/2 years in
August, fanning global concerns that the world's second-largest
economy may be slowing more sharply than earlier feared.
The official PMI survey is heavily weighted toward larger,
state-owned firms, while the private Caixin/Markit PMI is a gauge of
smaller ones.
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Hit by a property downturn, factory overcapacity, weak exports and
high local government debt, China's economy is headed for its
slowest growth this year in a quarter of a century.
Some analysts believe current growth levels are already well below
the government's official 2015 target of 7 percent.
Shockwaves from the county's collapsing stock markets and Beijing's
unexpected devaluation of the yuan earlier this month have added to
fears the economy could be at risk of a hard landing, though most
economists believe a more gradual but protracted slowdown is more
likely.
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The central bank on Tuesday cut interest rates and trimmed the
amount of reserves banks must hold for the second time in two
months, ramping up efforts to support the economy. It has now cut
interest rates five times since November, and economists predict
more easing measures in coming months.
"I'm expecting to see more targeted policy steps to support the real
economy," said Nie Wen, an analyst at Hwabao Trust in Shanghai.
"GDP grew 7 percent in the first half thanks to a booming services
industry. But the (economic) situation will be difficult in the
second half given the (poor) performance of the stock market."
The PMI factory numbers will be released on Tuesday, Sept. 1, along
with official data on activity in the services sector. The Caixin/Markit
manufacturing PMI (final) and services PMI will be released on the
same day.
(Reporting by Kevin Yao and Winni Zhou; Editing by Kim Coghill)
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