China Factory Gauge Sinks to First Contraction in Two Years (1)
2015-02-01 02:27:45.512 GMT
By Bloomberg News
(Bloomberg) -- A Chinese manufacturing gauge signaled
contraction in January for the first time in more than two
years, adding pressure on the central bank to stimulate a
faltering economy.
The government’s Purchasing Managers’ Index fell to 49.8
last month from 50.1 in December, according to data released
Sunday by the statistics bureau and the China Federation of
Logistics and Purchasing in Beijing. That missed the median
estimate of 50.2 in a Bloomberg News survey of analysts and for
the first time since September 2012 fell below the 50 level that
separates expansion and contraction.
China’s fiscal revenue increased the least since 1991 last
year due to a property slump and declining factory profits,
curbing scope to boost growth with government spending. That may
leave the onus on monetary policy to spur the economy.
“We expect such data will weaken further and push the
government to take further easing actions,” said Zhang Zhiwei,
chief China economist at Deutsche Bank AG in Hong Kong.
Seasonal reasons, falling commodity prices, and weak
domestic and international demand caused the decline in
manufacturing PMI, Zhao Qinghe, senior statistician at NBS, said
in a statement on the bureau’s website.
Most sub-indexes fell, including new orders and new export
orders. The sub-index of raw material purchasing prices
decreased to 41.9, the lowest in at least a year, on the decline
in commodity prices.
“China’s manufacturing sector is still facing de-
leveraging pressure,” said Liu Li-Gang, head of Greater China
economics at Australia & New Zealand Banking Group Ltd. in Hong
Kong. “Deflation in the manufacturing sector continues and the
destocking process has not yet completed.”
Services Slip
The non-manufacturing PMI fell to 53.7 in January from the
previous month’s 54.1, according to a separate report from the
NBS and the CFLP. Services made up 48.2 percent of the economy
in 2014, up 1.3 percentage points from a year earlier.
“Taken together, the early signs for January point to a
continued moderate deterioration in growth,” Bloomberg
economist Tom Orlik wrote in a report today. “With the equity
market rally also losing steam, that should set the scene for
further easing by the central bank. We continue to expect a
further rate cut in the first quarter.”
The central bank lowered benchmark interest rates in
November for the first time in two years, helping spur stock
prices. The benchmark Shanghai Composite Index fell for a fourth
day on Friday, capping its biggest weekly decline in a year on
concern of regulatory scrutiny of margin lending.
The Chinese economy grew 7.4 percent last year and 7.3
percent last quarter, according to an NBS release last month.
“China’s economic downturn will continue in the first
quarter and manufacturing activities will stay in a
contraction,” Hua Changchun, a China economist at Nomura
Holdings Inc. in Hong Kong, said before the data release. He was
the only economist surveyed by Bloomberg to correctly forecast
the January PMI figure.
For Related News and Information:
Top Stories:TOP<GO>
China Fiscal Revenue Slowdown Puts Liquidity Onus on PBOC (1)
China Export Machine Delivers Again in Prop for Growth: Economy
Chinese Factory Gauge Recovers Lost Ground on Stimulus: Economy
--With assistance from Karen Zhang in Shanghai and Ran Li in
Beijing.
To contact Bloomberg News staff for this story:
Xiaoqing Pi in Beijing at +86-10-6649-7570 or
xpi1@bloomberg.net
To contact the editors responsible for this story:
Malcolm Scott at +852-2293-1975 or
mscott23@bloomberg.net
Jim McDonald
2015-02-01 02:27:45.512 GMT
By Bloomberg News
(Bloomberg) -- A Chinese manufacturing gauge signaled
contraction in January for the first time in more than two
years, adding pressure on the central bank to stimulate a
faltering economy.
The government’s Purchasing Managers’ Index fell to 49.8
last month from 50.1 in December, according to data released
Sunday by the statistics bureau and the China Federation of
Logistics and Purchasing in Beijing. That missed the median
estimate of 50.2 in a Bloomberg News survey of analysts and for
the first time since September 2012 fell below the 50 level that
separates expansion and contraction.
China’s fiscal revenue increased the least since 1991 last
year due to a property slump and declining factory profits,
curbing scope to boost growth with government spending. That may
leave the onus on monetary policy to spur the economy.
“We expect such data will weaken further and push the
government to take further easing actions,” said Zhang Zhiwei,
chief China economist at Deutsche Bank AG in Hong Kong.
Seasonal reasons, falling commodity prices, and weak
domestic and international demand caused the decline in
manufacturing PMI, Zhao Qinghe, senior statistician at NBS, said
in a statement on the bureau’s website.
Most sub-indexes fell, including new orders and new export
orders. The sub-index of raw material purchasing prices
decreased to 41.9, the lowest in at least a year, on the decline
in commodity prices.
“China’s manufacturing sector is still facing de-
leveraging pressure,” said Liu Li-Gang, head of Greater China
economics at Australia & New Zealand Banking Group Ltd. in Hong
Kong. “Deflation in the manufacturing sector continues and the
destocking process has not yet completed.”
Services Slip
The non-manufacturing PMI fell to 53.7 in January from the
previous month’s 54.1, according to a separate report from the
NBS and the CFLP. Services made up 48.2 percent of the economy
in 2014, up 1.3 percentage points from a year earlier.
“Taken together, the early signs for January point to a
continued moderate deterioration in growth,” Bloomberg
economist Tom Orlik wrote in a report today. “With the equity
market rally also losing steam, that should set the scene for
further easing by the central bank. We continue to expect a
further rate cut in the first quarter.”
The central bank lowered benchmark interest rates in
November for the first time in two years, helping spur stock
prices. The benchmark Shanghai Composite Index fell for a fourth
day on Friday, capping its biggest weekly decline in a year on
concern of regulatory scrutiny of margin lending.
The Chinese economy grew 7.4 percent last year and 7.3
percent last quarter, according to an NBS release last month.
“China’s economic downturn will continue in the first
quarter and manufacturing activities will stay in a
contraction,” Hua Changchun, a China economist at Nomura
Holdings Inc. in Hong Kong, said before the data release. He was
the only economist surveyed by Bloomberg to correctly forecast
the January PMI figure.
For Related News and Information:
Top Stories:TOP<GO>
China Fiscal Revenue Slowdown Puts Liquidity Onus on PBOC (1)
China Export Machine Delivers Again in Prop for Growth: Economy
Chinese Factory Gauge Recovers Lost Ground on Stimulus: Economy
--With assistance from Karen Zhang in Shanghai and Ran Li in
Beijing.
To contact Bloomberg News staff for this story:
Xiaoqing Pi in Beijing at +86-10-6649-7570 or
xpi1@bloomberg.net
To contact the editors responsible for this story:
Malcolm Scott at +852-2293-1975 or
mscott23@bloomberg.net
Jim McDonald