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People's Daily Online>>China Business

Analysts seek easing as factory index falls anew

By Wang Yanlin (Shanghai Daily)

08:36, December 31, 2011

CHINA'S manufacturing activity shrank for a second month in December but showed signs of improvement, a survey reported yesterday.

Considering difficult times ahead, analysts called for more aggressive easing of policies to support manufacturers.

The HSBC China Manufacturing Purchasing Managers' Index, a composite indicator to reflect operating conditions in the manufacturing sector, settled at 48.7 in December, up from 47.7 a month earlier. But it still signaled a deterioration in industrial business conditions as a reading below 50 means contraction.

"While the pace of slowdown is stabilizing somewhat, weakening external demand is starting to bite," said Qu Hongbin, chief economist for China at HSBC.

According to the survey, new export business fell during December, ending a two-month period of growth. Survey participants said it linked closely with sluggish demand from external clients, especially from Europe. That led to a "solid reduction" in new orders.

Meanwhile, manufacturers reported a slight cut in workforce numbers, the first decrease since September.

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

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