China’s manufacturing PMI index fell to 49.9 in July from 50.0 a month ago, pointing to a slowing of growth momentum in the world’s second-largest economy, data released by the China Logistics Information Center showed Monday. The final July figure, released on Monday morning, confirmed a reading of 52. “But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued”. “The combination of these factors means that the fuel price will decline significantly on Wednesday, providing input cost relief for manufacturers and consumers”, says Barclays.
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The MPC had been widely expected to cut interest rates last month, but unexpectedly left them unchanged. A Reuters poll found that it will soon be forced to extend and expand the scope of its asset purchase program.
BANGKOK (AP) – Shares were higher Monday in Asia, as investors shrugged off disappointing growth data from the USA and lackluster but better-than-expected manufacturing figures for China. But a relatively weak performance may lift the spirits of investors hoping to see the U.S. Federal Reserve hold back on its next interest rate hike.
“Today’s data do not bode well for GDP growth in the second half”, ANZ economists Louis Lam and David Qu wrote in a note. The index has signaled expansion for 37 consecutive months.
The manufacturing sector continues to be challenged by a strong dollar and weak global growth, although it has pulled out of the lowest depths of its slowdown from mid-2015.
The index measuring expected business conditions in six months’ time rose to 55.4 in July, up from 52.9 in June. Beijing is counting on a transformational shift to services to make up for persistent woes in manufacturing.
The output index fell to 47.8 in July from 53.6 in June, its lowest since October 2012, while new orders – which grew robustly in June – suffered their sharpest turnaround since 1998 and fell at their fastest rate in over three years.
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The BoJ will now undertake a review of its entire easing campaign ahead of the next policy meeting on September 21. “But we counsel caution: to us, the decision suggests that the BoJ has reached the limits of its current policy framework”.
