“China’s factories struggled to expand in May despite recent interest rate cuts and other policy stimulus, a Reuters poll showed, suggesting the government may have to do more to halt a protracted slowdown in the economy,” Reuters reports.
The official manufacturing Purchasing Managers’ Index, known as PMI, is forecast to inch up to 50.2 from April’s 50.1 reading. That’s according to the median forecast of fourteen economists in the poll. According to Reuters the forecasts are as follows:
As a reminder the readings above 50 indicate an expansion while below 50Â show a contraction.
The official PMI factory numbers will be released tomorrow on June, 1st.
Economic Calendar: Courtesy of FX Street.
“Although the government has unveiled a series of policy stimulus measures, the effect has yet to show up,” said Nie Wen, an economist at Hwabao Trust in Shanghai.
China’s economic growth slowed further in the three months to March this year, expanding 7% compared to a year earlier, its slowest pace since the global financial crisis in 2009, BBC reported in April.
Last year, China’s economy, which is the world’s second largest, grew at its slowest pace since 1990. It expanded by 7.4% in 2014, missing its annual growth target of 7.5% for the first time in 15 years. However, despite the slowdown, the Chinese economy was still one of the world’s fastest-growing.
According to Reuters “economists at HSBC lowered their forecast this week for China’s 2015 GDP growth to 7.1 percent from 7.3 percent, and cut their export growth forecast to 4.2 percent from 7.1 percent.“
“Weaker exports will weigh on corporate spending and sentiment. Meanwhile, policy easing is behind the curve, further cutting into investment growth,” they said in a research note. Given weak conditions, HSBC has doubled down on its projections for further policy easing this year, Reuters notes.
Is China’s economy heading towards a recession? Will we see more weakness and eventually a hard landing? Gordon Chang, the author of “The Coming Collapse Of China” sees the dire scenario to materialize in six months and here is why!
Moreover, India’s economy grew faster than China’s in the quarter through March, data showed on Friday last week. However, a sharp downward revision for the previous quarter triggered doubts about the accuracy of a new method used to measure economic activity.
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