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China manufacturing slows with dip in demand

31-08-2010
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China manufacturing slows with dip in demand

China’s manufacturing activity has slowed for the first time in seven months in May as new orders fell, according to the latest industry data.

The flash HSBC Purchasing Managers’ Index (PMI) for May fell to 49.6, slipping under the 50-point level for the first since October. Readings under 50 indicate contraction.

“The cooling manufacturing activities in May reflected slower domestic demand and ongoing external headwinds,” said Qu Hongbin, chief China economist at HSBC.

“A sequential slowdown is likely in the middle of the second quarter, casting downside risks to China’s fragile growth recovery,” Qu added.

The latest PMI has revived concerns about the strength of China’s economic recovery this year.

The PMI survey showed new export orders hovered below the 50-point level in May, though the rate of decline slowed from April, where a level of 50.4 was recorded.

China posted lacklustre data for industrial output and investment in April after an unexpected economic slowdown in the first quarter, raising fears of a feeble recovery in coming months.

The HSBC flash PMI comes a week before the final reading and is the earliest indicator of how the Chinese economy is faring each month.

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