Chinese manufacturing eases in February

| March 1, 2011
Chinese manufacturing eases in February

Manufacturing activity in China eased in February, two separate surveys have revealed today.

Firstly, the official China Federation of Logistics and Purchasing (CFLP) said its purchasing managers index (PMI) dipped to 52.2 in February from January’s 52.9.

According to the CFLP, this was the third consecutive month in which activity fell.

However, the index remains above the crucial 50 level, which indicates expansion and it has been above the 50 level for two years.

Secondly, the HSBC China Manufacturing PMI dropped to a seven-month low in February to 51.7 from January’s 54.5.

Again, this index remains above the 50 level but according to HSBC chief economist Qu Hongbin, “China’s manufacturing sector is cooling a little.”

Meanwhile, the input price index rose in February – highlighting inflationary pressures – a major concern for China.

Last month, China’s National Bureau of Statistics (NBS) revealed the consumer price index rose 4.9% in January on an annual basis – up from December’s 4.6% – well in excess of the 3% target.

The People’s Bank of China has already lifted interest rates three times in four months in order to curb high inflation.

According to Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada, today‘s manufacturing data should “reinforce the case” for further interest rate hikes from Beijing in the short-term.

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