Further declines seen in Chinese manufacturing

Chinese manufacturing activity has slowed for the second month running, the latest survey shows, adding to calls for more stimulus in the world’s second largest economy.

The HSBC Manufacturing Purchasing Managers’ Index (PMI) for December stands at 48.7 points, up from the 47.7 recorded in November. Any reading below 50 indicates that activity is contracting.

The data shows that where slowing output was reported, this was due to lower levels of new orders. New exports orders fell after demonstrating two months of growth, while Chinese manufacturers reported higher stocks of finished goods for the first time in 17 months.

Hongbin Qu, chief economist for China at HSBC, says the country should be able to avoid a hard landing, so long as it embarks on an appropriate easing programme.

“While the pace of slowdown is stabilising somewhat, weakening external demand is starting to bite,” he explains.

“This, plus the ongoing property market corrections, adds to calls for more aggressive action on both fiscal and monetary fronts to stabilise growth and jobs, especially with prices easing rapidly.”

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