China's weak factory PMI raises pressure for consumer stimulus
Manufacturing falls to six-month low
Factory gate prices weakest in 14 months
Non-manufacturing accelerates
Consumer stimulus needed as exports slow, analyst says
Recasts, adds analyst comment in paragraphs 6-7, 16, 20, details, context throughout, bullets
By Joe Cash
BEIJING, Aug 31 (Reuters) -China's manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders, an official survey showed on Saturday, pressuring policymakers to press on with plans to direct more stimulus to households.
The National Bureau of Statistics purchasing managers' index slipped to 49.1 from 49.4 in July, its sixth straight decline and fourth month below the 50 mark separating growth from contraction. It missed the median forecast of 49.5 in a Reuters poll.
After a dismal second quarter, the world's second-largest economy lost momentum further in July, prompting policymakers to signal they were ready to deviate from their playbook of pouring funds into infrastructure projects, instead targeting fresh stimulus at households.
Sentiment remains gloomy among manufacturers as a years-long property crisis keeps domestic demand in the doldrums and Western curbs loom on Chinese exports such as electric vehicles.
Producers reported factory gate prices were their worst in 14 months, plunging to 42 from 46.3 in July, while the new orders and new export orders sub-indices remained firmly in negative territory and manufacturers maintained a hiring halt.
"The fiscal policy stance remains quite restrictive, which may have contributed to the weak economic momentum," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
"To achieve economic stabilisation, the fiscal policy stance needs to become much more supportive. With the U.S. economy slowing, exports may not be as reliable a source for growth as it was in the first half of the year," he added.
Policy advisers are pondering whether Beijing may decide in October to bring forward part of next year's bond issuance quota if growth does not show signs of bottoming out in the summer.
China made a similar move at the same time last year with stimulus that raised the deficit to 3.8% of GDP from 3.0% and frontloaded part of the 2024 local government debt quotas to invest in flood prevention and other infrastructure.
This time, however, analysts anticipate the authorities will seek to put a floor under depressed domestic demand.
EARLY ENCOURAGING SIGNS
Retail sales topped forecasts last month, apparently vindicating officials' July decision to allocate around 150 billion yuan ($21 billion) China is raising through ultra-long treasury bonds this year towards subsidising a trade-in scheme for consumer goods.
And the August reading of the non-manufacturing PMI, which includes services and construction, quickened to 50.3 from 50.2, allaying fears that it would also enter a period of contraction.
Still, economists are waiting on more specific plans to reinvigorate China's 1.4 billion-strong consumer market beyond a pledge from the top-decision making body of the ruling Communist Party that it will do so.
It will not be easy.
"I'm not actually sure if more (stimulus) can be rolled out," said Xu Tianchen, senior economist at the Economist Intelligence Unit, given the scale of the trade in scheme, which he said "would provide moderate support to the economy" and "seems to be welcomed by consumers".
What is more, any effort to revive domestic demand will likely be ineffective unless further efforts are taken to alleviate a bruising slump in the property sector, which has weighed heavy on consumer spending over the past three years.
With 70% of household wealth held in real estate, which at its peak accounted for a quarter of the economy, consumers have kept their wallets tightly shut.
A Reuters poll on Friday forecast home prices will fall 8.5% in 2024, deeper than the 5.0% decline tipped in a May survey.
"I think officials will settle for something lower than 5% this year," the EIU's Xu said, referring to Beijing's annual growth target.
Reporting by Joe Cash; Editing by Himani Sarkar and William Mallard
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
