Shanghai (AFP) – Manufacturing in Asia further weakened last month, data showed on Monday, with activity in China hitting a more than three year low, as leaders faced calls for action to avoid a sharper slowdown.
The latest gloomy readings come as export-dependent nations feel the pinch from collapsing demand caused by the long-running debt crisis gripping Europe and the stuttering recovery in the United States.
In China, the purchasing managers’ index (PMI) compiled by British bank HSBC slid to 47.6 last month, the lowest since March 2009, from 49.3 in July.
A PMI reading above 50 indicates expansion, while one below 50 points to contraction.
The figures came just two days after Beijing said its official PMI reading was 49.2 in August, down from 50.1 in July, and the first contraction in nine months.
“China’s economic growth is still declining, putting the government under more pressure to loosen its monetary policy,” said Zhang Zhiwei, chief China economist at Nomura Securities in Hong Kong.
“China’s economic slowdown has a great influence on its trading partners as declining demand from China certainly has an impact on exports of other countries,” he told AFP.
China’s economy has seen a marked easing over the past year, expanding 7.6 percent in the second quarter of 2012, the worst performance in three years and the sixth straight quarter of easing.
A slowdown in China, a key driver of Asian growth, has had a knock-on effect around the region, with Australia — a major supplier of the country’s energy commodities — heavily impacted.
The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index in August reaching 45.3, up 5.0 points but still well within the zone of contraction.
“Manufacturing conditions continue to be very challenging across the sector with the high (Australian) dollar and weakness in demand in the domestic and export markets weighing on growth,” Innes Willox, chief executive of Australian Industry Group, told Dow Jones Newswires.
In South Korea, HSBC’s PMI measure rose slightly to 47.5 from 47.2 in July but well below 50 for a third straight month, while in Taiwan the HSBC PMI fell to 46.1 from 47.5.
South Korea’s inflation rate was the lowest for more than 12 years in August, rising just 1.2 percent year-on-year official figures showed Monday, increasing prospects of an imminent interest rate cut.
Manufacturing in India, another Asian giant suffering with an economic slowdown, fell to a nine-month low hit by global weakness and output disruptions.
HSBC’s India PMI slipped to 52.8 in August from 52.9 in July, in part due to disruptions from power outages.
One investment bank responded to the latest manufacturing data Monday by slashing its forecast for Chinese growth this year and warning there was a possibility of a hard landing unless Beijing acts.
Australia and New Zealand Banking Group said it now expects annual growth of 7.8 percent, down from a previous estimate of 8.2 percent but well down from actual growth of 9.2 percent last year. Beijing has set a target of 7.5 percent.
HSBC also highlighted worrisome signs including a rapid contraction in export orders, a record high in stocks of finished goods and the fastest job shedding in more than three years.
“Beijing must step up policy easing to stabilise growth and foster job market conditions,” HSBC economist QuHongbin said.
China has already cut interest rates twice this year in June and July and trimmed the amount of funds banks must place in reserve three times since last December, but analysts are calling for more.
However, in an editorial Monday in the People’s Daily — mouthpiece of China’s ruling Communist party — indicated Beijing was eager to avoid knee-jerk reactions to the current slowdown.
“We must implement current policies and measures well but also build up the inventory of ammunitions,” it said. “We must tackle short-term and urgent issues, but also grasp the opportunity to cure long-standing ills.”