Article by ForexTime
Chinese data on Friday indicated that the world’s second-largest economy may be slowing sharply as a report showed that activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindle.
Japanese Economics Minister Akira Amari said on Friday he expected China’s government to take steps to prevent its economic slowdown from becoming a global problem.
The preliminary Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) stood at 47.1 in August, well below a Reuters poll median of 47.7 and down from July’s final 47.8. The flash PMI, the earliest economic measure to be released about China each month, is closely followed by global investors for clues on the health of the economy.
The reading was the worst since March 2009, in the depths of the global financial crisis, and the sixth straight one below the 50-point level, which separates growth in activity from contraction on a monthly basis.
China’s surprise devaluation of the yuan last week and a near-collapse in its stock markets in early summer have sparked fears that it could be at risk of a hard landing which would hammer world growth, sending financial markets into a tailspin.
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A detailed breakdown of the activity survey showed conditions were deteriorating on almost every level, with factory output sinking to a near four-year low, domestic and export orders declining at a faster rate than in July and companies laid off more workers.
U.S. Federal Reserve policymakers discussed China, Greece’s debt crisis and the weak state of the global economy at their last meeting in July, according to minutes of the meeting released this week. But analysts still expect the U.S. central bank to raise interest rates later this year.
U.S. stock futures fell sharply after the PMI report and most Asian stock markets and the Australian dollar extended early losses. Overnight on Wall Street, the S&P 500 sank to a more than six-month low on concerns about how China’s slowdown would impact U.S. firms’ earnings and global growth.
Article by ForexTime
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