China HSBC Final PMI Falls To Six-Month Low In January As Output And New Orders Decrease, And Business Conditions Worsen

   on January 29 2014 9:58 PM
China Final PMI
A worker assembles a generator at a factory in Hefei, Anhui province November 2, 2013. Reuters/China Daily

China's manufacturing activity decreased for the first time in six months in January, falling to 49.5 from December's 50.5 and from the 49.6 figure reported in a flash PMI released last week, an HSBC Bank survey revealed  Thursday.

The January data shows that business conditions in China’s manufacturing sector worsened as output and new orders decreased. Firms cut staffing levels at the fastest pace since March 2009; the average production costs fell at a marked rate; firms lowered output charges for the second straight month. The data, overall, pointed to a weak start for China's economy in 2014.

"A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January," Hongbin Qu, chief economist for China at HSBC, said in a statement. "Policymakers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed."

Production levels continued to increase in January, extending a current sequence of expansion to six months, the survey noted. But the growth rate eased to a marginal pace. While larger volumes of new work boosted production at some companies, others reduced output amid reports of a slowdown in client demand stemming from weak economic conditions.

As a result, the survey said, total new business was relatively the same as in the previous month, following a five-month sequence of growth. Meanwhile, new export orders lessened for the second straight month in January, with firms noting weaker demand in several key export markets, according to the survey.

Last week's flash PMI reading, which arrived alongside signs of tightening in China's markets, was a factor in a decrease in global markets as investors grew concerned about the impact of a slowdown in China's economy, various news agencies reported.

Join the Discussion