First of­fi­cial in­di­ca­tor for Q2 shows ex­pan­sion may be de­cel­er­at­ing af­ter record­ing 6.9pc in first quar­ter

New Straits Times - - Business -

CHINA’S of­fi­cial fac­tory and ser­vices gauges pulled back from multi-year highs, dim­ming the out­look for the sus­tain­abil­ity of the past two quar­ters’ ac­cel­er­a­tion in eco­nomic growth.

Man­u­fac­tur­ing pur­chas­ing man­agers in­dex (PMI) fell to 51.2 last month, from an al­most five-year high of 51.8 in March, miss­ing the me­dian es­ti­mate of 51.7 in a Bloomberg sur­vey and fall­ing short of all pro­jec­tions.

Non-man­u­fac­tur­ing PMI dropped to a six-month low of 54, from 55.1 in March. Gauges still showed mo­men­tum, as num­bers higher than 50 in­di­cated im­prov­ing con­di­tions.

The first of­fi­cial eco­nomic in­di­ca­tor for the sec­ond quar­ter sig­nalled the ex­pan­sion may be poised to de­cel­er­ate this year af­ter un­ex­pect­edly pick­ing up to 6.9 per cent in the first quar­ter, the first back-to-back ac­cel­er­a­tion in two years.

The fac­tory and ser­vices gauges re­mained at rel­a­tively ro­bust lev­els, but last month’s data showed broad-based weak­en­ing across em­ploy­ment, out­put, new or­ders and ex­port or­ders.

While an­a­lysts have up­graded their fore­casts for growth this year, ac­cord­ing to a re­cent Bloomberg sur­vey, tighter prop­erty curbs in­tro­duced in ma­jor cities and a higher base of pro­ducer prices than last year are likely to weigh on out­put in com­ing months.

Top of­fi­cials have also sig­nalled they would in­tro­duce stricter reg­u­la­tory mea­sures to curb fi­nan­cial risk.

“The weak­ness is across the board and points to slow­ing growth mo­men­tum,” wrote Zhou Hao, an econ­o­mist at Com­merzbank AG in Sin­ga­pore, in a note.

“This on one hand re­flects that there is lit­tle im­prove­ment in un­der­ly­ing de­mand; on the other hand, the de-lever­ag­ing ef­fort by the Chi­nese au­thor­i­ties has started to work. In gen­eral, China is in the course of mon­e­tary tight­en­ing and reg­u­la­tion strength­en­ing.” Bloomberg

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