Thursday, September 22, 2011

China's Factory Activity Slipped in September

Is this the precursor to the end of Australia's and Canada's booms?

BEIJING—A preliminary gauge of China's manufacturing activity fell in September, indicating that growth in the world's second-largest economy continued to slow.
The preliminary HSBC China manufacturing purchasing managers index fell to 49.4 in September from a final reading of 49.9 in August, HSBC Holdings PLC said Thursday.
A reading below 50 indicates contraction from the previous month, while a reading above 50 indicates expansion.
The decline in the PMI could reignite some concerns over a sharp economic slowdown in China, due to weakening global demand for Chinese goods and various tightening measures at home.
The Australian dollar, which is sensitive to Chinese demand for Australian commodities, slipped after the data were released, falling below parity to the U.S. dollar for the first time since Aug. 8.
HSBC economist Qu Hongbin, however, said in a note that the data are consistent with a "soft landing" scenario. "Fears of a hard landing are unwarranted," he wrote. "External demand weakened a little but official trade data still show solid export growth."
Mr. Qu said he expects China's gross domestic product growth to be around 8.5% to 9% in coming quarters, down from 9.5% in the second quarter. The manufacturing output subindex fell to 49.2, a two-month low.
The preliminary China PMI figure, also called the HSBC Flash China PMI, is based on 85% to 90% of total responses to HSBC's PMI survey each month and is issued about a week before the final PMI reading. September's final reading is due Sept. 30.
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