Chinese stocks tumbled on Thursday in the wake of another weak
'flash' manufacturing PMI data, with the Shanghai Composite Index down over 2%. The Chinese stock benchmark index fell to the lowest level since February 2009. The Shanghai Composite index is down 8% this year.
China’s manufacturing output may have improved slightly in September but it is still likely to show contraction for an 11th successive month, a private survey showed on Thursday, fueling concern about the state of the world's second-largest economy.
The so-called "flash" Purchasing Mangers' Index (PMI) stood at 47.8 in September,
HSBC Holdings Plc and
Markit Economics said. That compares with the 47.6 final reading of last month.
If confirmed, this would extend the widely watched gauge’s longest streak below the crucial expansion-contraction dividing line of 50 in the HSBC-Markit survey’s eight-year history.
The preliminary China reading, called the Flash PMI, is based on 85% to 90% of responses to a survey of more than 420 companies, according to HSBC. The final number will be released Sept. 29.
A separate, government-backed manufacturing PMI, which fell to a nine-month low of 49.2 for August, is due to be released Oct. 1.
“With the sharp deceleration in exports growth over the past a few months and external headwinds still strong, manufacturers, especially those more exports-oriented, will be increasingly forced to cut more jobs in the months ahead,” Sun Junwei and Qu Hongbin, China economists at HSBC, said in a report today.
Further monetary easing and fiscal spending will be required to help secure funding for new construction projects after the government said this month it approved more roads and subways, HSBC said.
China’s gross domestic product (GDP) grew by 7.6% in the second quarter of 2012 from a year earlier, the smallest gain in three years and sixth consecutive quarter of deceleration. China's GDP growth may cool to 7.4% in the current quarter.