China’s manufacturing declines for 5th month; easing more likely

 China’s manufacturing activity declined for the 5th month, signaling  lower industrial production in the world’s second largest economy.

HSBC flash purchasing managers index (PMI) fell in March to 48.1 lower than 49.6 in February. An index reading of 50 marks the line between expansion and contraction.

HSBC’s PMI index has not been consistently above 50 since June 2011 but it is still comfortably above the low 40’s during the global financial crisis from late 2008 to early 2009.

Slowing growth in Europe combined with weaker domestic demand in China are the primary catalysts for China’s contracting manufacturing index reading.

Despite the weaker economic data in China, many economists are expecting government leaders in Beijing to help stimulate growth through policy easing steps.

“Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand. This calls for further easing steps from the Beijing authorities,” HSBC chief China economist, Qu Hongbin, said in a statement.

Japan

 Japan recorded a 32.9 billion yen ($395 million) surplus for February which is noticeably higher than January’s ¥1.475 trillion deficit, according to Japan’s Ministry of Finance.

Japan’s trade surplus in February was mostly attributed to higher shipments to the U.S.

Europe

Euro zone March composite PMI was 48.7, missing estimates of 49.6 according to Bloomberg. February PMI was 49.3.

PMI estimates for the two largest economies in Europe also disappointed estimates.

Germany’s flash PMI lowered to 48.1 points in March compared to 50.2 in February, according to manufacturing data released by Markit.

Economists were expecting 51.0.

Germany’s March services PMI was also weaker than estimated.

French PMI dropped by 2.4 points to a seasonably adjusted 47.6 in March compared to 50.0 in February.

Economists were expecting 50.5 in March.

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