Measure of China Manufacturing Slips

December 31st, 2014 5:33 am | by John Jansen |

The final reading of the HSBC PMI for China increased from the initial reading of 49.5 to 49.6. At that level the index is at its lowest level in seven months and is in contractionary territory.

Via Bloomberg:

China December Factory Gauge Falls in Sign Growth Support Needed

By Bloomberg News Dec 30, 2014 8:45 PM ET

A Chinese factory gauge sank to a seven-month low in December, holding near a preliminary reading and putting pressure on policy makers to provide more support for the world’s second-largest economy.

The final reading of the Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was 49.6 this month from 50 in November, compared with the Dec. 16 reading of 49.5. Numbers below 50 indicate contraction. The median estimate of eight analysts in a Bloomberg survey was for 49.5.

Mired in industrial overcapacity, factory-gate deflation and a housing slump, China is headed for its slowest full-year economic expansion since 1990. The central bank, which cut its benchmark interest rate in November, has expanded its toolkit to support growth, freeing up more funds for lenders in 2015 by broadening the definition of a deposit and adding liquidity by stealth at least four times in the past four months.

The HSBC and Markit PMI is typically based on responses to surveys sent to purchasing managers at more than 420 companies.

A separate manufacturing PMI will be released tomorrow by the National Bureau of Statistics and China Federation of Logistics and Purchasing in Beijing. That index, which has been based on responses to surveys sent to purchasing executives at 3,000 companies, probably dropped to 50 in December from 50.3 the previous month, according to a Bloomberg survey.

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