China manufacturing shrinks but 'hard landing remote'
Manufacturing activity in China contracted for the second straight month in August, but a slight pick-up suggested an economic slump was less likely, early data from HSBC indicated.
HSBC''s preliminary purchasing managers'' index rose to 49.8 in August from 49.3 in July - which was the lowest level in 28 months and the first contraction in a year. A reading above 50 indicates the sector is expanding, while a reading below 50 suggests contraction.
However, the figures also showed the cost of raw materials rose at a faster rate this month, complicating Beijing''s efforts to rein in inflation in the world''s second-largest economy.
The August reading is subject to revision when the bank publishes its final figures on September 1.
New export orders continued to contract in August although the sub-index reached the highest level in three months, HSBC said, amid deepening economic woes in the United States and Europe -- key buyers of Chinese-made products.
HSBC chief economist Qu Hongbin said the improvement in manufacturing activity this month showed that "the hard landing risk is still remote".
Source: The Telegraph