SYDNEY - Growth in China's vast factory sector slackened in August as foreign and domestic demand slowed, stoking speculation that further policy easing would be needed to prevent the economy from stumbling once more.
The surveys of purchasing managers (PMI) from across Asia told a tale of underwhelming new orders and faltering exports, overshadowing brighter spots such as India and Taiwan.
That was a taster for a feast of euro zone PMIs due later Monday where any weakness would only add to pressure on the European Central Bank to at least open the door to more monetary stimulus at its policy meeting this week. ECONEUROPE
The Chinese surveys come in both official and private sector flavors. The National Bureau of Statistic's version fell from a 27-month high to 51.1 in August, as factories shed jobs for at least the 24th consecutive month.
More worrying was the HSBC/Markit PMI, which eased to 50.2 in August, only a whisker above the 50-point mark that separates expansion from contraction.
The official survey showed falls across output, employment, new orders, delivery time and raw material inventory, while the private version highlighted subdued demand.
"The economy is healthier than it was in early 2014, but the recovery is tepid and patchy, with housing weakness a weighty anchor on both activity and confidence," said Huw McKay, a senior international economist at Westpac in Sydney.
"The authorities would be wise to stay the course with easier policy settings, especially on the fiscal side."
GOOD AND BAD
The lull in Chinese demand is rippling across the region.
South Korea reported exports to China fell in August for a fourth consecutive month on-year, the longest such losing streak in two years, taking some of the shine off a continued recovery in shipments to the United States and the European Union.
Exports overall dipped 0.1 per cent in the month, underscoring a tentative recovery for Asia's fourth-largest economy and leaving the door open for another rate cut before year-end.
"Today's trade data should reinforce the government's cautious view on growth," said Raymond Yeung, senior economist at ANZ bank, adding that another rate cut by the Bank of Korea before year-end remains a distinct possibility.
Indonesia's version of the PMI, from HSBC/Markit, showed activity there contracted for the first time in a year in August, weakened by declining new orders and production.
In Japan, the flow of data has shown the economy still suffering the baleful effects of a sales tax hike in April.
Wild swings in consumer spending saw the economy shrink an annualized 6.8 per cent in the second quarter, more than erasing the previous quarter's 6.1 per cent gain.