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China manufacturing PMI at 6-month low

China’s purchasing managers’ index (PMI) for manufacturing dropped to a six-month low of 50.5 per cent in January, official data here said. Extending its decline from December, the last month’s index indicated the lowest factory activity since August while marking the 16th straight month above the boom-bust line, the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing said in a joint statement on Saturday.

In January, the sub-index for production stood at 53 per cent, down 0.9 percentage points from December but 0.2 percentage points higher than last year’s average. The sub-index for new orders lost 1.1 percentage points to 50.9 per cent.

The sub-index for purchase quantity moved down 1.7 percentage points to 51 per cent in January, while the sub- index for new export orders stood at 49.3 per cent, down 0.5 percentage points from December. A PMI reading below 50 indicates contraction, while one above 50 signals expansion.

All major PMI indices declined in January, indicating downward pressure on the economy, but in general, the country’s economy is still expecting stable growth, Zhang Liqun, an analyst with the Development Research Centre of the State Council told state run Xinhua news agency. Falling new orders showed the growing impact of market demand restraints, with expectations of enterprise competition and restructuring in the future, Zhang said.

Qu Hongbin, chief China economist with HSBC, described the dynamic as ‘a soft start’ to China’s manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January.
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