Chinese Growth Engine Stalls – More Easing To Come?

China's giant manufacturing sector has fallen to a six and a half year low, a decline that will further distress global markets which are already edgy about slowing growth in the world's second biggest economy.

The Flash Caixin Purchasing Managers Index for August fell to 47.1. The result down from July's final reading of 47.8, which was the worst outcome in 44 months.

Analysts had been expecting a pick-up in the PMI from July's unexpected weak reading.

Commenting on the Flash China General Manufacturing PMITM data, Dr. He Fan, Chief Economist at Caixin Insight Group said, “The Caixin Flash China General Manufacturing PMI for August has fallen further from July’s two-year low, indicating that the economy is still in the process of bottoming out. But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving. There is still pressure on the front of maintaining growth rates, and to realize the goal set for this year the government needs to fine tune fiscal and monetary policies to ensure macroeconomic stability and speed up the structural reform. This will lead the market to confidence and renew the vigour of the economy.”

Analysts in Hong Kong are undecided if the Chinese authorities will step back in to support the market perhaps as early as this weekend.

 

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