Asia stagnates as China fights for new growth

 
Ben Southwood
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ECONOMIES across Asia failed to fight themselves out of the doldrums that have endured for months, data showed yesterday, with index levels improving only marginally into October.

Business surveys recorded improved but marginal output growth in China and Hong Kong, while output in Australia and Japan continued to contract, while India’s expansion slowed down. Only oil-rich Saudi Arabia and the United Arab Emirates managed to expand output.

China registered a score of 50.5 for October on its composite output purchasing managers’ index (PMI), released by Markit and HSBC yesterday, only a touch above the 50 mark that separates growth from contraction.

Hongbin Qu, chief HSBC economist in China called the result evidence of Chinese “bottoming out”, and predicted that authorities would ease monetary policy further, in order to sustain recovery in the Asian juggernaut.

The situation in Asia’s second biggest economy was gloomier. Japan’s composite PMI for output rose from 48.9 in September to 50 last month, Markit said. While this is an improvement, it continues months of scrappy results close to the all-important 50 level.

Australia fared even worse, at least in its service sector, with a PMI of 42.8 in October pointing to a ninth consecutive month of decline, according to data from the Australian Industry Group and Commonwealth Bank.

And even though India continued to grow modestly, with a composite output PMI of 53.5 in October, this was down from a more optimistic 55 in September.

But the Arabic oil states seemed to be going from strength to strength – even in non-oil sectors. The United Arab Emirates posted composite output at 53.8, unchanged on September, while Saudi Arabia was expanding healthily, with a PMI of 59.8. However, this was slightly lower than October’s 60.3.