China manufacturing activity expanded at a slower rate in January, missing analysts’ expectations, according to data released Friday by the country's National Bureau of Statistics and the China Federation of Logistics and Purchasing. But a survey by HSBC-Markit showed robust growth in factory output that beat its forecast.
The official data on the Purchasing Managers' Index (PMI) in the manufacturing sector showed that the index fell to 50.40 in January, from 50.60 in the previous month. A reading above 50 indicates expansion, but analysts had expected the country’s manufacturers to increase orders and boost the PMI to 50.90 in January.
“Things look a little shaky,” said IHS Global Insight economists Xianfang Ren and Alistair Thornton in a survey note, MarketWatch reported. “The economy has yet to generate the type of self-perpetuating growth that is needed to put the recovery on a comfortable footing.”
According to the HSBC Purchasing Managers’ Index released Friday, China's manufacturing activity expanded to 52.3 in January, from the previous month’s 51.9, topping analysts’ consensus of 52.1. This data indicate the world’s second-largest economy is regaining some momentum after slowing in the latter half of last year.
The HSBC survey said that new orders rose for the fourth consecutive month in January and at a solid pace that was the sharpest in two years. The prices of raw materials increased, which raised output costs.
“A higher reading of January final manufacturing PMI implies that China’s manufacturing activity is gaining further steam on the back of improving domestic conditions,” said Hongbin Qu, chief economist, China & Co-Head of Asian Economic Research at HSBC, in a research note. “We see increasing signals of a sustained growth recovery in the coming months: the steady investment growth led by infrastructure projects, the improving labor market conditions boosting consumer spending, and the ongoing re-stocking process to lift production growth.”
The difference in the trend by the surveys can be linked to the variation in the sample size. HSBC China report on manufacturing is based on data compiled from responses of over 400 manufacturing companies while the official Chinese PMI is based on the response from about 3,000 firms.