A Chinese central bank survey found the entrepreneur confidence index fell to 63.6% in the third quarter, 1.3 percentage points lower than the second quarter.

 Reuters/Beijing

 

Business confidence among Chinese entrepreneurs fell in the third quarter – marking the third consecutive quarter of decline – a central bank survey showed yesterday, mirroring signs of fragility in the economy.

The survey conducted by the People’s Bank of China found the entrepreneur confidence index fell to 63.6% in the third quarter, 1.3 percentage points lower than the second quarter.

The central bank survey of entrepreneurs, bankers and households followed official data released earlier this month that showed China’s economic growth weakened further in August, with industrial output growth falling to a six-year low.

Despite the slowdown, 79.5% of bankers in the survey believed current monetary policy measures as appropriate, an increase from 72% in the second quarter.

Among households, 59.5% see housing prices as unacceptably high, a decrease from 63% from the second quarter.

China’s manufacturing activity missed expectations in August, indicating that the country’s economy may be losing momentum and require more stimulus.

The official purchasing managers index (PMI) fell to 51.1 for the first time in seven months from 51.7 in July, the National Bureau of Statistics said. Economists had forecast a reading of 51.2.

The PMI is a key gauge of the sector’s health and any reading above 50 indicates expansion.

The data measures activity in China’s bigger factories, many of which are government-backed businesses.

The weaker-than-expected numbers may pressure the Chinese government into increasing easing measures in order to meet its annual growth target of 7.5%.

Julian Evans-Pritchard, China Economist at Capital Economics said the data shows “economic conditions have softened” and that a gradual slowdown is expected in the coming months.  “Broadly speaking, today’s PMI reading suggests that downwards pressure on the economy, as a result of slowing investment in sectors with overcapacity, particularly property, is no longer being fully offset by policy support measures.”

Meanwhile, a closely-watched private survey by banking group HSBC also showed a fall in factory activity.

Its final PMI reading for August slipped to 50.2 from 51.7 in July, marking its lowest level in three months.

The private survey measures activity in smaller factories in China.