- POSTED: 23 Jan 2014 11:11
Chinese manufacturing contracted for the first time in six months in January, a survey showed on Thursday, casting a pall over growth prospects for the world's second-largest economy this year.
BEIJING: Chinese manufacturing contracted for the first time in six months in January, a survey showed on Thursday, casting a pall over growth prospects for the world's second-largest economy this year.
British banking giant HSBC's preliminary reading of China's purchasing managers' index (PMI), which tracks manufacturing activity in factories and workshops, fell to 49.6 in January, the lowest since August.
The index is a closely watched gauge of the health of the Asian economic powerhouse. A reading above 50 indicates growth, while anything below signals contraction.
The last time the figure for China dropped below the critical point was in July, when it stood at 47.7.
"The marginal contraction of January's headline HSBC Flash China Manufacturing PMI was mainly dragged by cooling domestic demand conditions," Qu Hongbin, the bank's economist in Hong Kong, said in a statement accompanying the data.
"This implies softening growth momentum for manufacturing sectors, which has already weighed on employment growth," he said, adding Beijing was likely to maintain policy support for economic expansion.
The announcement came after China on Monday said its 2013 economic growth came in at 7.7 per cent, maintaining its slowest expansion in more than a decade.
The government has warned of "deep-rooted problems" the country faces this year, including a mountain of local authority debt, which experts consider a serious potential drag on the economy unless steps are taken to rein it in.