China manufacturing continues to shrink

manufacturing sector’s output is shrinking at its fastest rate in 18 months,
according to results released yesterday.

flash Markit/HSBC Purchasing Managers Index recorded an eight-month low of
48.1, Reuters and others report.

result under 50 in the survey-based index indicates contraction.

There is an increased concern among China watchers that the country will not maintain its GDP growth target of 7.5 per cent per annum, with some analysts predicting the country will resort to stimulus measures.

”The PMI
reading for March suggests that China’s growth momentum continued to slow down.
Weakness is broadly-based with domestic demand softening further,” HSBC chief
China economist Hongbin Qu said, according to Fairfax.

”We expect
Beijing to launch a series of policy measures to stabilise growth.”

The Markit/HSBC
survey focuses mainly on smaller, privately-owned firms, and the official PMI
on larger, government-owned ones.

The result is
down from last month’s flash Markit/HSBC PMI of 48.3 and final result of 48.5.
Economists had predicted a result of 48.7.

New export orders increased in the results, suggesting that weaker domestic demand was to blame.