• IS provokes sea-change

    It has been a grave mistake to defy both Russia and France, says Leopold Scholtz.

  • Nene's SAA nemesis

    No political figure seems to have the guts to speak out against Dudu Myeni, says Solly Moeng.

  • The mp3 revolution

    Ian Mann takes a look at the war between digital music and the compact disc.

All data is delayed
See More

China manufacturing growth falls

Feb 25 2013 07:57

Shanghai - China's manufacturing growth hit a four-month low in February but remained positive, British banking giant HSBC said Monday, noting that the world's second-biggest economy was still recovering slowly.

The bank's seasonally adjusted preliminary purchasing managers' index (PMI) stood at 50.4 for the month, down from a final 52.3 in January, it said in a statement.

A reading above 50 indicates expansion and it was the fourth consecutive month of growth, after 12 months of contraction.

"The Chinese economy is still on track for a gradual recovery," Qu Hongbin, a Hong Kong-based economist with HSBC, said in the statement, downplaying the fall in PMI.

"The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth," he added.

Chinese banks more than doubled their lending in January from December, granting 1.07 trillion yuan ($171.7bn) worth of new loans, official data showed earlier this month, as Beijing seeks to boost economic growth.

The domestic economy expanded at 7.8% last year, its slowest pace in 13 years, in the face of weakness at home and in key overseas markets.

Policymakers cut interest rates twice in 2012 and have trimmed the amount of cash banks must place in reserve three times since December 2011 to encourage lending and pump up growth.

The PMI figure, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of China's economy.

Liao Qun, a Hong Kong-based economist with Citic Bank International, said weaker manufacturing activity in February may have suggested the domestic rebound was unstable, but the overall recovery trend remained intact.

"The figure, after being seasonally adjusted, might indicate a weaker economic rebound in February due to the uncertainty in overseas economies and a lack of clarity in China's fiscal and monetary policies ahead of the two sessions," Liao said.

The "two sessions" is a Chinese reference to the annual meetings of the country's top legislative and political advisory bodies in March, which will set the tone for the country's economic policies.

"Given the HSBC PMI index is just preliminary, we'll have to wait for the official PMI to gauge the momentum of China's growth recovery," Liao added.

The official PMI, released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics on a monthly basis, focuses more on large and medium companies, while the HSBC PMI covers mostly small firms.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

china  |  manufacturing output


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The 25 basis points interest rate increase is:

Previous results · Suggest a vote