Monday, January 23, 2012

China manufacturing starts new year downbeat

China's manufacturing activity shrank for the third straight month in January, data showed Friday, leading analysts to warn of of a further slowdown for the world's number two economy.

HSBC's preliminary purchasing managers' index (PMI) stood at 48.8 in January, up only marginally from 48.7 in December, the British banking giant said.

A reading above 50 indicates expansion while a reading below 50 suggests a contraction.

The news come days after the government released data showing the economy grew 9.2pc last year, well down from the 10.4pc growth in 2010, while most forecasts put this year's expansion at between just 8pc and 8.5pc.

However, some analysts believe it could slow even more in the first quarter, with growth even dipping below the 8pc level considered necessary to maintain jobs and contain social unrest.

"The third consecutive below-50 reading of the manufacturing PMI suggested that growth is likely to moderate further," Qu Hongbin, HSBC chief economist for China, said in a statement.
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