China manufacturing slips in May
pharmafile | June 3, 2014 | News story | Manufacturing and Production | China, hsbc, manufacturing, pmi
Activity in China’s manufacturing sector slipped slightly in May, according to figures from HSBC, with the bank suggesting that the government will need to do more to encourage growth.
Output contracted at what HSBC calls a ‘fractional pace’ but there was better news from the figures for new manufacturing orders in the country, which stabilised after three months in which they had declined.
HSBC’s Purchasing Managers’ Index (PMI) is a monthly measure which shines a light on areas such as export growth, hiring and firing and order books and is of interest to pharma companies looking to consolidate their footholds in China.
Yet although the reading for May signalled only a marginal worsening in business conditions, HSBC points out that the health of the sector has now deteriorated in each month of 2014 so far.
“Subdued client demand was linked…to relatively weak market conditions,” the company says in a statement. “In contrast, new export orders rose at the quickest pace in over four years, with a number of companies citing new client wins. Job shedding meanwhile persisted, with the latest reduction of workforce numbers the strongest in three months.”
Hongbin Qu, HSBC’s chief economist in China says: “The final PMI reading for May confirmed that the economy is stabilising, but it is too early to say that it has bottomed out, particularly in light of a weaker property sector.”
The May PMI was 49.4 – up from 48.1 in April – with new orders stabilising and export orders rising to 53.2, with the stocks of finished goods index up to 49.8.
“The lack of a sustainable growth momentum warrants stronger policy support,” Qu says. “We expect both monetary and fiscal policy to be loosened gradually over the coming months.”
There were some bright spots: as well as the jump in exports, there was the first increase in input buying in four months.
But further job losses at manufacturing companies is a trend which has been followed since last November as firms downsize. “Despite lower staffing levels, backlogs of work also declined,” HSBC says.
Adam Hill
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