China manufacturing slows
(MENAFN- Khaleej Times) A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed amid government efforts to rein in excessive credit
The Purchasing Managers' Index was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Friday in Beijing. That matched the 50.5 median estimate of analysts surveyed by Bloomberg News and compared with December's 51 reading. Numbers above 50 signal expansion
A separate manufacturing gauge released by HSBC Holdings and Markit Economics this week pointed to the first contraction in six months, underscoring the risk of a deeper slowdown in the world's second-biggest economy. Communist Party leaders are wrestling with risks from a $6 trillion shadow- banking industry and swelling local-government debt
"The economy has lost some momentum," said Wang Tao, chief China economist at UBS in Hong Kong, who previously worked at the International Monetary Fund. Credit growth slowed in the second half and "that impact is being felt," she said. Estimates for the official PMI from 31 economists ranged from 50 to 50.9. The benchmark Shanghai Composite Index fell 0.8 per cent on January 30, capping the worst start to a year since 2010, on concern the economy is slowing as the US Federal Reserve cuts stimulus. China's markets are closed for the Lunar New Year holiday from January 31 to February 6
A gauge of output in January fell to a four-month low of 53 from 53.9, while the new-orders index declined to a six-month low of 50.9 from 52.0, according to government data. The survey suggested manufacturing jobs are shrinking at a faster pace, with a gauge of employment declining to 48.2, the lowest since February 2013. HSBC's survey showed companies eliminating jobs at the fastest rate in almost five years. HSBC's broader index, which showed a reading of 49.5 for January, is based on responses from more than 420 manufacturers and is weighted more toward smaller companies. The official PMI is based on questionnaires sent to about 3,000 companies
"Growth may continue to slow in the next couple of quarters due to generally tighter credit conditions, amid government efforts to contain local government debt and regulate shadow banking," said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong, who previously worked at the International Monetary Fund
China's government-sponsored PMI has stronger representation of large companies and state-owned enterprises that serve the domestic market than the one prepared by Markit and HSBC, according to Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong
The decline in January's PMI was mainly due to the approach of the Lunar New Year holiday, Zhao Qinghe, a statistician at the statistics bureau, said in a statement today. China's operating environment for production will improve in 2014, Zhao said
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