18 May 2015
Manufacturing in China has suffered its biggest drop in a year during April 2015, primarily due to a decrease in new orders. The data reaffirms many economists’ push for fresh stimulus from the Chinese government. The HSBC/Markit Purchasing Managers’ Index (an indicator of the economic health of the manufacturing sector) fell from 49.6% in March 2015 to 48.9% in April 2015 - the lowest it’s been in a year – due to lower demand and deflationary pressures.
An economist at Markit, Annabel Fiddes, says “China's manufacturing sector had a weak start to Q2, with total new business declining at the quickest rate in a year while production stagnated. The Purchasing Managers Index data indicate more stimulus measures may be required to ensure the economy doesn't slow from the 7 percent annual growth rate seen in Q1."
Manufacturing input and output has declined for 9 months. Factories have been shedding jobs for 18 months. These factors, amongst many, are used to foresee an economic downturn or stagnation. Economists predict China’s economic growth to cool to a quarter-century low of 7% this year from 7.4% in 2014.
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