HONG KONG — A closely watched survey of the manufacturing sector in China fell in June, in the latest sign that Beijing’s efforts to scale back stimulus measures have begun to moderate the strong growth of what is the world’s largest developing nation.
The manufacturing purchasing managers’ index, compiled by the China Federation of Logistics and Purchasing and released on Thursday, came in below expectations at 52.1, down from 53.9 the previous month.
A reading above 50 indicates expansion, so the June figure showed that the Chinese manufacturing sector is growing. But the P.M.I.’s decline confirmed what many economists have long projected: that the pace of China’s growth probably hit its highest level during the first quarter of this year and that more modest rises are now in store — a situation that has been largely engineered by the country’s authorities in a bid to prevent the economy from overheating.
Tao Wang, a China economist at UBS in China, wrote in a report previewing the upcoming June data this week that “economic growth is strong but momentum has peaked.” Economists at HSBC, in a similar preview note, commented that the likely slowdown from the first-quarter peak would represent “a just slowdown to a more sustainable rate rather than a meltdown.”
Still, Europe’s sovereign debt woes, and a rash of labor unrest in China last month, are expected to add to companies’ difficulties in coming months, while the slight rise in the renminbi that the authorities are now permitting will squeeze margins for exporters.
Financial markets have reacted badly to the signs of slowing growth and to the accompanying uncertainty as to what policy measures Beijing might still implement. The Shanghai composite index, the main market gauge for mainland China, has fallen more than 20 percent since the start of the year, making it one of the world’s worst performers so far in 2010, along with Greece.
“Our baseline scenario is for a soft landing in G.D.P. growth and rising but modest inflation,” Ms. Wang of UBS wrote in her note this week. “However, continued policy uncertainty, including in the property sector, and the decelerating sequential momentum will weigh on the market.”
So far this year, the Chinese authorities have launched an array of measures to rein in growth. These have ranged from instructing banks to extend fewer loans to measures designed to curtail the sharp price rises seen in much of the country’s property sector. Many economists expect the central bank to stage at least one small increase in interest rates before the end of this year.
In Japan, meanwhile, a quarterly survey OF manufacturers conducted by the central bank and released Thursday rose surprisingly sharply.
The reading in June stood at 1, compared with minus 14 the previous month. A positive reading shows that optimists outnumber pessimists. The so-called Tankan survey also found that large manufacturers planned to increase capital spending slightly, showing that, so far, the overall improvement in the economy is outweighing concerns about the potential impact of Europe’s debt worries and about the sharp decline in the euro against the yen and other currencies.
Despite the surprisingly good reading in the Tankan, the outlook for growth in Japan is well below what is expected for China, which is expected to overtake Japan as the world’s second-largest economy, after the United States, this year.
Japan’s stock market failed to rise despite the good news on Thursday: By late morning, the Nikkei 225 index was down nearly 2 percent.
