China manufacturing slowest in 3 years

China's manufacturing expanded in June at the slowest pace in almost three years as growth in export orders weakened for the third month, a survey of purchasing managers showed.

Tootoo.com learned from an e-mailed statement that the Purchasing Managers' Index fell to 52 from 53.3 in May, according to the China Federation of Logistics and Purchasing. That's the lowest since August 2005.

A global economic slowdown triggered by the U.S. housing slump may be exacerbated by increased borrowing costs as central banks tackle rising inflation. China's growth will drop below 10 percent this year for the first time since 2002, the World Bank forecasts.

"Manufacturing growth will continue to weaken, in line with the economy as a whole,'' said Sun Mingchun, an economist with Lehman Brothers Holdings Inc. in Hong Kong.

The index of new export orders declined to 50.2 from 53.4. A reading above 50 reflects an expansion, below 50 a contraction.

Those for new orders and output also fell, while the input- price index climbed to a record, underscoring the threat to manufacturing from higher costs for labor and raw materials.

In the first five months, 2,331 casual shoe makers closed in Guangdong province, the world's largest footwear production center, because of rising wages and gains by the yuan that ate into export profits, the customs bureau said yesterday.