China manufacturing hits lowest point in more than 6 years

BEIJING-An early gauge of China’s factory activity fell to a six-and-a-half year low in August despite China’s efforts to reinvigorate slowing economic growth.


A detailed breakdown of the activity survey showed conditions were deteriorating on nearly every level, with factory output sinking to a near four-year low, domestic and export orders declining at a faster rate than in July and companies laid off more workers. “Now they need to double down on stimulus”, said Tim Condon, an economist with ING, who added that economic activity in the third quarter could fall below that annual pace.

The flash purchasing managers index (PMI) plunged from 47.8 in July to 47.1 in August, well below the 50 benchmark that separates growth from contraction, as measured by managers’ purchasing intentions, according to the preliminary results of the survey.

The mood in markets, already soured by overnight weakness on Wall Street, darkened further on a grim reading of China’s factory activity.

A reading above 50 indicates expansion, while a reading below that represents contraction.

China’s economy, a key driver of global growth, expanded 7.4 percent last year, its weakest since 1990, and has slowed further this year, growing 7.0 percent in each of the first two quarters.

“At the margin, this additional evidence of China’s weakening economy puts downward pressure on global prices of oil, coal, iron ore, steel and other basic materials”, said PNC economist Bill Adams, in a research note.

“But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving”, said He Fan, Chief Economist at Caixin Insight Group.

China stocks tumbled on Friday morning following release of weak economic data.

The index for new orders rose to a preliminary 53.2 from a final 50.9 in the previous month, also indicating the fastest growth in seven months.


Previously sponsored by global bank HSBC, the PMI is now sponsored by Chinese financial publication Caixin.

China August flash factory PMI falls to 47.1, fastest contraction in six-and-a