China manufacturing index hits seven-month low: HSBC

FE Team | Published: February 21, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

BEIJING, Feb 20 (AFP): A key index of Chinese manufacturing fell further in February to hit its lowest level in seven months, HSBC said Thursday, in a sign of diminishing strength in the world's second-largest economy.
The British banking giant's preliminary reading for its purchasing managers' index (PMI) for China, which tracks manufacturing activity in factories and workshops, fell to 48.3 this month.
That marked a further tumble from the final reading of 49.5 in January, when the figure showed contraction for the first time in six months.
The index is a closely-watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction.
Qu Hongbin, HSBC economist in Hong Kong, blamed February's worsening figure on decreasing new orders and production at Chinese factories, and called on the government to adjust policy to support growth.
"The building-up of disinflationary pressures implies that the underlying momentum for manufacturing growth could be weakening," he said in a statement accompanying the data. "We believe Beijing policy makers should and can fine-tune policy to keep growth at a steady pace in the coming year."
China's inflation rate remained subdued at 2.5 per cent year-on-year in January, official data showed, arousing economists' concerns that the figure suggested weak domestic demand and murky growth prospects.
But Julian Evans-Pritchard, an analyst with research firm Capital Economics, argued that broader indicators showed the labour market remained healthy and that the weakness in manufacturing was an acceptable result for Beijing.
"Looking ahead, there are no signs of a shift towards loosening policy," he wrote in a research note.
Compared with the past, when authorities were quick to throw cash to stimulate a slowing economy, they have recently been taking a largely tight-fisted approach.