AN index of growth in China’s vast manufacturing sector fell from a 27-month high to 51.1 in August, a government study showed yesterday, slightly less than forecast and adding to signs of growing softness in the Chinese economy.

    China’s official Purchasing Managers’ Index (PMI) slipped in August from July’s 51.7, the National Bureau of Statistics said.

    A breakdown of the survey showed output, employment, new orders, delivery time and raw material inventory all fell across the board, with the labor market showing the most weakness.

    The employment sub-index slipped to a three-month low of 48.2 in August, below the 50-point mark that separates growth in activity from a contraction.

    An output sub-index slipped to 53.2 from July’s 54.2, while new orders fell to 52.5 from July’s 53.6.

    The broad retreat across all sub-indices underscores rising concerns that the world’s second-largest economy may be stumbling again.

    The economy has had a rocky spell this year. Growth sank to an 18-month low of 7.4 percent in the first quarter before edging up to 7.5 between April and June.

    Hopes that the mild rebound may gain traction were battered last month when growth in retail sales and fixed asset investment slowed, while money injected into the economy unexpectedly tumbled to a near six-year low.

    Cooling activity has hurt factories across China.

    More Chinese manufacturers are falling behind on their payments as economic growth falters, causing accounts receivable to spike 1.1 trillion yuan (US$179 billion) in the first six months from the year-ago period, the government said last month.

    But Zhao Qinghe, a senior statistician at the National Bureau of Statistics, cautioned against an overly pessimistic response to yesterday’s official reading on manufacturing activity.

    Although the PMI retreated in August from July, it is still the second-highest reading struck this year, Zhao said.

    A private survey also showed yesterday that growth in China’s factory sector slipped to a three-month low in August as foreign and domestic demand cooled.

    The final HSBC/Markit PMI retreated to 50.2 in August, roughly in line with a preliminary reading of 50.3 and only a shade above the 50-point mark that demarcates an expansion in activity from a contraction.

    In the HSBC survey, new orders and new export orders — proxies for domestic and foreign demand, respectively — fell to their lowest in two to three months, but managed to hold above the 50-point level.

    The new orders sub-index was the worse performer of the two, shedding two full points to 51.3 from July.

    The underwhelming performance may reinforce bets that China would further loosen fiscal and monetary policies to stoke growth in the world’s second-biggest economy.

    “The economy still faces considerable downside risks to growth in the second-half of the year, which warrants further policy easing,” said Qu Hongbin, an economist at HSBC.

    (SD-Agencies)