China HSBC manufacturing PMI hits seven-month low in February

Sun Mar 2, 2014 9:08pm EST
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By Adam Rose

BEIJING (Reuters) - China's factory activity shrank again in February as output and new orders fell, a private survey found on Monday, reinforcing concerns of a slowdown in the world's second largest economy.

The final Markit/HSBC manufacturing Purchasing Managers' Index (PMI) fell to a seven-month low of 48.5 in February, the third straight monthly decline, from January's 49.5. The figure was in line with the 48.3 reported in the preliminary version of the PMI released on Feb 20.

A reading below 50 indicates a contraction, while one above 50 shows expansion.

"Signs are becoming clear the risks to GDP growth are tilting to the downside," said Hongbin Qu, chief economist for China at HSBC, in a statement accompanying the PMI results.

"This calls for policy fine-tuning measures to stabilize market expectations and steady the pace of growth in the coming quarters."

The PMI, which measures sentiment, found that new orders and output both contracted for the first time in seven months, while new export orders contracted less than in January.

Output was likely affected by manufacturers closing for China's biggest annual holiday, the Lunar New Year festival, which began on January 31 and covered early February, although the PMI results are seasonally adjusted.

The employment sub-index also fell for a fourth straight month to 47.2, its lowest point since March 2009.   Continued...

An employee works above a furnace containing molten steel at a factory of Dongbei Special Steel Group Co. Ltd. in Dalian, Liaoning province January 30, 2014. REUTERS/China Daily