which surveys more than 800 companies in 20 industries
Stocks in China extended their decline after the data were feather earrings for sale released. The benchmark Shanghai Composite Index was 1.7 percent lower at 2469.36 at the 11:30 a.m. local-time break. The gauge has slumped 12 percent this year as the government tightened policies to cool inflation and concern deepened that faltering growth in developed economies will sap export demand.
HSBC’s preliminary index, known as the Flash PMI, is based on 85 percent to 90 percent of responses to a survey of executives in more than 400 companies. The final reading will be released on Sept. 30.
A gauge of output dropped below 50 in September after expanding the previous month, orders contracted at the same rate and a measure of new export orders contracted at a faster pace, today’s statement showed. Sub-indexes for output prices and input costs rose at a faster pace compared with August, today’s report showed, indicating inflationary pressure hasn’t abated.
The preliminary index has matched the final reading twice since HSBC began publishing the series in February. The index fell below 50 in July for the first time in a year. The official manufacturing index released by the statistics bureau and the China Federation of Logistics and Purchasing had a reading of 50.9 in August.
A final reading below 50 for the third month “implies that China’s manufacturing sector will see weakening sequential growth in the coming months,” Qu Hongbin, a Hong Kong-based economist at HSBC, said. “Fears of a hard landing feathers in hair extensions are unwarranted” as the nation is less dependent on overseas sales than during the last crisis and domestic investment and consumer spending are “resilient,” he said.
In contrast, Kevin Lai, a Hong Kong-based economist at Daiwa Capital Markets Ltd. said he’s “extremely concerned” about the outlook for the economy. Concerns the economy will experience a hard landing “are not unwarranted,” he said.
Economists including Shen Jianguang at Mizuho Securities Asia Ltd. and Lu Ting at Bank of America Merrill Lynch have said the HSBC PMI focuses on small and medium-sized companies that have been affected more than state-owned enterprises in the government’s tightening campaign.
The official PMI, which surveys more than 800 companies in 20 industries, hasn’t dropped below the 50 line that divides expansion from contraction since February 2009.
The International Monetary Fund this week cut its forecast for global growth to 4 percent for 2011 from a June estimate of 4.3 percent, and said “downside risks are growing” as Europe’s debt crisis widens. The Washington-based lender also lowered its estimate for China’s expansion because of monetary tightening and a weaker outlook for exports.
The IMF now projects the Chinese economy will grow 9.5 percent this year, down from a forecast of 9.6 percent in June, and 9 percent in 2012.
Premier Wen Jiabao said this month the slowdown is within the government’s expectations and that stabilizing prices remains the top economic priority.
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