Manufacturing growth in China slowed last month, official figures released yesterday showed, amid concerns about soaring food and property prices.
The country’s Purchasing Managers Index fell to 53.9 from 55.2 in November, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement yesterday.
The government-backed PMI gives an indication of manufacturing activity by surveying more than 820 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics.
A figure above 50 indicates expansion in China’s vast manufacturing sector, while a figure below 50 represents contraction.
The data confirms a slowdown highlighted by the HSBC’s PMI index released on Thursday which fell to 54.4 last month against 55.3 in November.
However, the bank, which interviewed purchasing managers from over 400 companies, said manufacturing activity during the last quarter was stronger than in the previous two quarters.
Zhou Xiaochuan (周小川), the governor of China’s central bank, the People’s Bank of China, pledged on Friday to try to keep prices “basically stable” this year, after the central bank raised interest rates on Christmas Day for the second time since mid-October.
Inflation reached 5.1 percent in November, its highest level in over two years, exceeding analysts’ predictions.
The consumer price index, the main gauge of inflation, stood at 3.2 percent for the 11 months to last month, exceeding the government target of 3 percent for all of last year.
“Today’s numbers reflect government efforts to limit price gains and adjust the nation’s growth model, and economic momentum remains steady,” the China Federation of Logistics and Purchasing said in a separate statement on its Web site yesterday.
Still, inflation is spreading from food to raw materials and energy and may squeeze companies’ margins and hurt export competitiveness, the organization said.
“It’s good to reduce inflation pressures,” said Ken Peng (彭墾), a Beijing-based economist at Citigroup Inc. “I do not see much risk of a sharp economic slowdown.”
Besides raising rates, the central bank increased the proportion of deposits that lenders must set aside as reserves six times last year and allowed the yuan to gain 3.6 percent against the US dollar.
The currency strengthened beyond 6.6 per US dollar on Friday for the first time in 17 years, fueling speculation that officials would allow more gains to counter inflation.
China’s key stock gauge declined 14.31 percent last year, the worst performer among the world’s 14 biggest benchmark indexes, on concern that tightening measures would crimp growth and profits.
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