Surveys show slow growth in China manufacturing

SHANGHAI (AP) ? Surveys show China's manufacturing remained sluggish in October, with a government industry group reporting the slowest growth in nearly three years.

The China Federation of Logistics and Purchasing said Tuesday that its monthly purchasing managers index fell an unexpectedly large 0.8 percentage point to 50.4, just above the 50-level that signifies expansion.

It forecast the economy would continue to slow in the last months of the year.

A similar survey by HSBC showed a contrary trend, with its PMI rising to 51.0 in October from 49.9 the month before. Though it reported improved an improvement, HSBC said the figure indicated just a "modest rate of growth."

So far, there are scant signs of a major slowdown that might sap growth in other countries looking to China to help drive demand for iron ore, machinery and other goods.

The World Bank forecasts that China's economy will grow a relatively robust 9.3 percent this year. But most economists are forecasting a drop to below 9 percent growth next year, slowed by tight credit aimed at fighting inflation and weak export demand.

The Federation of Logistics and Purchasing said its survey showed a decline both in import and export orders.

In September, China's exports to the 27-nation European Union, China's biggest trading partner, fell 9.7 percent from a year earlier.

"There are clear signs of uncertainty in global markets that are impacting China's economy. The European and U.S. debt crisis has continued to worsen, the global recovery is still weak and unsteady," it said.

China's leaders have pledged to ease tight controls on bank lending and other policies aimed at fighting inflation, to help support growth.

The purchasing managers surveys for October did show significant progress in bringing prices lower, with the purchasing price index falling by more than 10 percentage points to 46.2, well below 50.

Lower prices for raw materials would help relieve pressures on manufacturers struggling to turn profits at a time of intense price pressure and rising costs.

"Inflation is on track for easing. This provides leeway for Beijing to fine-tune policy to strike a better balance between growth and inflation priorities," said HSBC economist Hongbin Qu.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2011-11-01-AS-China-Manufacturing/id-b686407463be4f26810b199743eabbdb

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