China's manufacturing activity contracts in January - HSBC

20 January 2012 09:29  [Source: ICIS news]

SINGAPORE (ICIS)--China’s manufacturing activity shrank for the third consecutive month in January, amid uncertainties over the global economy, raising expectations of further monetary easing by the government, banking firm HSBC said on Friday.

The preliminary HSBC purchasing managers' index (PMI) stood at 48.8 in January, up slightly from a final reading of 48.7 in December last year, the bank said in a statement. A figure above 50 indicates an expansion, while a figure below 50 means a contraction.

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

"We expect more policy easing to stabilise growth," Qu added.

The China government’s release of the final PMI reading for January this year is due on 1 February.

The PMI readings in January are likely to be influenced by the Chinese Lunar New Year holidays, which occurs earlier than usual on 22-28 January.

China will continue slowing down its pace of economic growth this year on expectations of weaker exports amid the debt crisis in Europe and the fragile state of the US economy, according to analysts.

China’s economy grew by 9.2% in 2011, slowing from the 10.4% expansion seen in 2010, the National Bureau of Statistics said earlier this week.

By: Nurluqman Suratman

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