30 Sep 2012

China manufacturing continues to contract

6:08 am on 30 September 2012

China's manufacturing activity has shrunk for an 11th straight month, adding to pressure on Beijing to provide fresh stimulus to boost the world's second largest economy.

The purchasing managers' index (PMI) released by British banking giant HSBC hit 47.9 this month, a mild improvement from a final reading of 47.6 in August. A reading below 50 indicates a contraction in manufacturing.

The latest figure marked nearly a year of continuous contraction since November, underscoring broader economic weakness and shrinking demand in key overseas markets.

HSBC says new export orders fell at the fastest rate in 42 months, indicating that economic weakness in major export markets such as the United States and Europe are continuing to weigh on the Chinese economy.

China's economic growth slowed to 7.6% in the June quarter, the sixth straight quarter of weakening expansion and the worst result since the height of the global financial crisis.

China has an annual economic growth target of 7.5%, compared to its 9.3% growth in 2011 and 10.4% in 2010.