China’s manufacturing slows: survey


Tue, Feb 26, 2013 - Page 15

China’s manufacturing is expanding at the slowest pace in four months, a private survey showed, underscoring the headwinds faced by policymakers in the world’s second-biggest economy.

The preliminary reading of a Purchasing Managers’ Index (PMI) was 50.4 this month, according to a statement from HSBC Holdings PLC and Markit Economics yesterday. That compares with the 52.3 final reading for last month and the 52.2 median estimate of 11 analysts surveyed by Bloomberg News. A number above 50 indicates expansion.

Yesterday’s report may damp optimism that an economic rebound is gaining traction following a seven-quarter slowdown and the weakest annual expansion in 13 years.

The benchmark Shanghai Composite Index last week dropped the most since May 2011 on concern the government will expand restrictions on the property market to curb home price gains.

“It casts some shadow over China’s recovery,” said Zhang Zhiwei (張志偉), chief China economist at Nomura Holdings Inc in Hong Kong and a former researcher for the IMF. “Chinese economic fundamentals may prove weaker than previously expected.”

China’s economy expanded 7.9 percent in the final three months of last year from a year earlier, the first pickup in eight quarters.

Growth may accelerate to 8.2 percent this quarter, according to the median estimate of 23 analysts surveyed by Bloomberg News this month.

Exports rose more than estimated last month and a broad measure of credit increased to a record, boosting prospects that the economic rebound is gaining momentum.

Data in the first two months are distorted by the week-long Lunar New Year holiday.

The HSBC gauge’s preliminary reading, called the Flash PMI, is based on 85 percent to 90 percent of responses to a survey of more than 420 companies. The data for this month’s reading was collected from Feb. 12 to Thursday.

“Despite the moderation of February’s flash PMI, the index recorded the fourth consecutive reading above the 50 critical line,” HSBC chief China economist Qu Hongbin (屈宏斌) said in a statement.

The recovery’s “underlying strength” is still “intact, as indicated by the still-expanding employment and the recent pickup of credit growth,” Qu said.

HSBC and Markit will report this month’s final reading on Friday, the same day that a separate, government-backed PMI will be released.

The official gauge showed a fourth month of expansion last month with a reading of 50.4, down from 50.6 in December last year.