Chinese manufacturing experiences continuing decline

Posted on 24 Mar 2014 by Callum Bentley

The Chinese manufacturing market has experienced its third consecutive month of decline, raising concerns about the drive of the world's second largest economy.

HSBC and Markit’s purchasing managers’ index signalled China’s manufacturing sector at 48.1 in March, its lowest in eight months and below the 50 level that separates growth from contraction.

The survey’s results signal the longest weak streak in Chinese manufacturing since the 2008 crisis.

The survey showed both output and new orders had weakened. However for the first time in four months, export orders grew, highlighting the weakening sector had been affected primarily by weak domestic demand.

Wei Yao, China economist at Societe Generale in Hong Kong said she expected the PMI to rebound in the following months after Chinese New Year. However she said the current PMI is “disapointing.”

“The government probably will have to provide some supporting measures,” Ms Yao told Reuters. “I think the slowdown is not over yet and our expectation is that the deceleration will continue into Q2,” she added.

The Markit/HSBC PMI is favoured towards smaller and private companies than the official index. Both the final Markit/HSBC manufacturing PMI and the official manufacturing PMI for March are due on April 1.