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Growth in China's factory sector seen stalling in September

Published 22/09/2014, 11:28
© Reuters Workers install the chassis along a production line at a truck factory of Anhui Jianghuai Automobile Co. Ltd (JAC Motors) in Hefei

BEIJING (Reuters) - Growth in China's large factory sector probably stalled in September, adding to worries the economy could be at risk of a sharper slowdown unless Beijing rolls out more stimulus measures, a Reuters poll showed on Monday.

The flash HSBC/Markit manufacturing Purchasing Managers' Index (PMI) likely straddled the boom-bust line of 50 in September, the median forecast of 19 economists showed, dipping from August's final PMI reading of 50.2, a three-month low.

The first indicator to preview how the world's second-largest economy has fared each month, the flash PMI is closely watched by investors, especially at a time when concerns about the Chinese economy are growing.

"There's still a lot of downward pressure on the economy, especially from the property sector," said Julian Evans-Pritchard, an economist at Capital Economics.

China's economy has stumbled this year as a slowdown in the housing market further weighed on softening domestic demand.

Worries that China was slipping into a deeper downturn were heightened this month when data showed factory output grew at the weakest pace in nearly six years in August as growth in other key sectors also cooled.

The run of weak data, including a measure for the amount of credit in China that crumbled to a six-year low in July, has fed speculation that the authorities may further loosen fiscal and monetary policies to stoke growth.

But Chinese leaders have publicly ruled out the option. Premier Li Keqiang said earlier this month that China cannot rely on easy credit to fuel its economic growth, and said the country would only tweak policy in certain areas to aid activity.

Finance Minister Lou Jiwei also said over the weekend that China would not dramatically alter its economic policies because of fluctuations in any one economic indicator.

China is scheduled to release its official PMI on Oct. 1. A reading over 50 for PMI indicates growth on a monthly basis, while an outcome below 50 points to a contraction.

© Reuters. Workers install the chassis along a production line at a truck factory of Anhui Jianghuai Automobile Co. Ltd (JAC Motors) in Hefei

(Reporting by Koh Gui Qing and Jake Spring; Editing by Jacqueline Wong)

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