BEIJING: Chinese manufacturing grew at its slowest pace in three months in December, HSBC confirmed on Thursday, as demand for the country’s goods eased, adding to concerns about recovery in the world’s number two economy.
The bank’s final purchasing managers’ index (PMI), which tracks manufacturing activity in China’s factories and workshops, came in at 50.5 last month, unchanged from a preliminary reading two weeks ago.
The index is a closely watched gauge of the health of the Asian economic giant. A reading above 50 indicates growth, while anything below signals contraction.
The December figure was down from 50.8 in November and marked the weakest growth since September when the reading was 50.2.
Chinese stocks fell after the announcement on Thursday, the first trading day of 2014, with the benchmark Shanghai index closing down 0.31 percent.
“The data suggests that the economy is drifting slightly downward and the manufacturing sector is not very strong,” Zheshang Securities analyst Zhang Yanbing told Agence France-Presse.
Thursday’s data came a day after the National Bureau of Statistics announced that its official PMI slowed to 51.0 last month from November’s 51.4. That marked the 15th consecutive month of growth, but the first time since June that the figure had dipped from the previous month.
Economists are increasingly concerned that the economy—a key driver of regional and global growth—is slowing again after enjoying pick-up in the middle of last year.
“The latest PMI surveys signal that there was a broad slowdown in manufacturing activity at the end of 2013,” said Mark Williams, chief Asia economist for research consultancy Capital Economics.
“Most notably, activity among large firms, a recent source of strength, has turned a corner and is likely to cool further as policymakers move to rein in local government debt,” he said in a research note. HSBC said that new orders, a component of its PMI reading, rose at a fractionally slower pace from November, with business from abroad posting a marginal decline for the first time in four months.
Qu Hongbin, an HSBC economist in Hong Kong, said in a statement accompanying the data that the easing in last month’s PMI was mainly due to modest output growth, which weakened from November’s eight-month high.
But he sounded a more optimistic note, saying that the fact that the index has sustained a fifth straight expansionary reading suggested the Chinese economy has been holding up well.
“The recovering momentum since August 2013 is continuing into 2014,” Qu said.