China’s manufacturing boom eased further last month as authorities tightened controls on credit, though inflationary pressures continued to rise, according to data released yesterday.
The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index (PMI) dipped to 52.9 last month from 53.9 in December and 55.2 in November.
Despite declining for two months, it was the 23rd month that the reading has remained above 50, the benchmark for expansion.
A second, competing survey issued yesterday, the HSBC China Manufacturing Purchasing Managers Index, edged up last month to 54.5 from a three-month low of 54.4 in December.
The HSBC survey covers 400 companies, while the federation’s monthly report measures data from 820 companies across a range of industries and is an indicator of future trends.
China’s inflation rate moderated to 4.6 percent in December from a 28-month high of 5.1 percent in November, suggesting authorities are making progress in cooling surging food and housing prices.
Beijing has raised interest rates twice in recent months and has repeatedly ordered banks to increase the amount of capital they hold in reserve to help check a flood of lending that is believed to be fueling excess investment in property and other construction, helping to push prices higher, but lenders tend to “front-load,” or rush out credit at the beginning of the year, countering those measures.
Meanwhile, rising commodity prices are further complicating China’s efforts to rein in inflation. Many economists are forecasting that consumer prices will remain relatively high for months to come.
Inflation measures within the PMI reflected strong increases, especially for energy, raw materials and food-related commodities, the report said.
The Beijing-sponsored survey showed steady demand for imports and strong purchasing by manufacturers, but indicators for new export orders, production and inventories fell, it said, suggesting caution among many manufacturers over prospects for future demand.
“There is no clear sign of a return to steady growth — there could be a continued contraction, and weakness in new exports and new orders means companies are facing overhead pressures,” the survey quoted federation analyst Zhang Liqun (張立群) as saying. “The troubles companies are facing are rather large.”
However, the HSBC survey appeared to show more robust support for continued strong growth, suggesting further room for credit tightening.
“The strong growth momentum leaves room for Beijing to fully focus on checking liquidity and inflation pressure,” said Qu Hongbin (屈宏斌), chief economist and co-head of Asian Economic Research at HSBC.