Econintersect: The "flash" (preliminary) manufacturing PMI (Purchasing managers' Index) reading for China from the HSBC-Markit survey has dropped even lower for February, coming in at 48.3, down from 49.5 in January. Even more significant is the decline of the Manufacturing Output Index below the 50 level (which marks the boundary between expansion and contraction) for the first time since second quarter 2013. The February reading was 49.2 compared to 50.8 in January.
Almost every parameter measured in the survey was negative and only two reported a slowing of degradation.
The production number is perhaps the most important parameter in the survey because it is based on output data which is likely the most accuately known at the time of the survey compared to some other assessments.
Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC said about the report:
"February's flash reading of the HSBC China Manufacturing PMI moderated further as new orders and production contracted, reflecting the renewed destocking activities. The building-up of disinflationary pressures implies that the underlying momentum for manufacturing growth could be weakening. We believe Beijing policy makers should and can fine-tune policy to keep growth at a steady pace in the coming year."
The final data for February will be released on 03 March. The official PMI survey taken by the government will also be reported on or about the same date.
- Business conditions deteriorate at moderate pace in February (HSBC Purchasing Managers’ Index™ Press Release, 20 February 2014)