Thursday, June 21, 2012

China PMI Falls, Points To Need for Stimulus -

HSBC Preliminary China PMI Fell in June -
BEIJING—A preliminary gauge of China's manufacturing activity showed more weakness in June, which appeared to strengthen the case for more stimulus measures to spur growth.
The HSBC initial, or "flash," measure of manufacturing also foreshadowed weakness in the months ahead as its barometer of new manufacturing orders, particularly export orders, showed further declines amid a lingering global economic slowdown.
China has already turned to an array of measures to boost growth, speeding up approvals on big projects, offering tax breaks and extending subsidies to promote consumer spending. A big unanswered question is whether the plethora of actions in the past month or so will be sufficient to boost growth during the second half of the year. If so, it could help strengthen global demand at a time when Europe is in recession and the U.S. is growing slowly.

Meanwhile, HSBC pointed to less than robust signs on the domestic economic front as well.
It said there was no meaningful improvement in domestic demand in June, with a rise in inventories of finished goods. Prices were also suggesting a potential for deflation, rather than inflation, due to weak demand.

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