Final China HSBC PMI dips to six-month low in January as new orders weaken

BEIJING Thu Jan 30, 2014 8:18am IST

A worker assembles a generator at a factory in Hefei, Anhui province November 2, 2013. REUTERS/China Daily/Files

A worker assembles a generator at a factory in Hefei, Anhui province November 2, 2013.

Credit: Reuters/China Daily/Files

Related Topics

BEIJING (Reuters) - Business conditions for China's manufacturers worsened in January as output and new order growth weakened, a private survey showed on Thursday, pointing to a weak start for the economy in 2014.

The Markit/HSBC final manufacturing PMI for January dipped to 49.5 from December's 50.5, the first deterioration in six months. The figure was in line with the 49.6 reported in the preliminary version of the PMI released a week earlier.

A reading below 50 indicates a contraction while one above shows expansion.

The survey, an early indication of sentiment in the 56.9 trillion yuan economy, found growth rates in output and new business weakening, while companies cut jobs at the fastest rate since March 2009.

"A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January," said Hongbin Qu, chief economist for China at HSBC, in a statement.

"Policymakers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed."

Last week's flash PMI reading, which coincided with renewed signs of tightening in China's financial markets, had contributed to a fall in global markets as investors fretted over the impact worldwide of a China slowdown.

However, many economists and experts say that Beijing will act if the economy loses traction too quickly even as it pushes towards more balanced and sustained economic growth.

China's leaders have pledged to push reforms to unleash new growth drivers as the world's second-largest economy loses steam, burdened by industrial overcapacity, piles of debt and soaring house prices.

That means reducing government intervention to allow market forces to have a bigger say in allocating resources, and promoting domestic consumption at the expense of investment and exports.

China's annual economic growth slowed to 7.7 percent in the fourth quarter of 2013 from 7.8 percent in the previous quarter, putting full-year growth at 7.7 percent, sightly ahead of the government's target of 7.5 percent.

While the economy narrowly missed expectations for full-year growth to fall to a 14-year low in 2013, some economists say a further cooldown will be inevitable this year as officials hunker down for difficult reforms.

Still, the majority view of China economists polled by Reuters remains that Beijing will manage to sustain economic growth broadly in line with both last year's 7.5 percent growth target and the International Monetary Fund's predictions.

Sources with top think-tanks have said the government likely will stick with the 7.5 percent target this year.

The PMI showed a reduced amount of export orders in January, indicating weak demand overseas, and an increase in inventories.

(Reporting by Jonathan Standing; Editing by Kim Coghill)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Record Highs

Record Highs

BSE Sensex, Nifty hit record highs, insurers gain  Full Article 

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Wipro Results

Wipro Results

Firm sees strong sales growth, eyes Europe deals   Full Article 

Scourge of Inflation

Scourge of Inflation

Markets' post-election enthusiasm lost on consumers  Full Article 

Just Not Enough

Just Not Enough

Amazon's smartphone fails to kindle a "Fire" among reviewers.  Full Article 

Rising Market Value

Rising Market Value

Facebook goes express to mega-cap status  Full Article 

Mining Roadblock

Mining Roadblock

Coal India's plans for 20 mines hit by land, environment delays  Full Article 

Power Jolt

Power Jolt

UAE's TAQA pulls out of India power plant deal with Jaiprakash  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage