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China's Manufacturing Growth Moderates To 4-Month Low

China's Manufacturing Growth Moderates To 4-Month Low
2/25/2013 12:13 AM ET

China's manufacturing sector growth slowed unexpectedly in February due to a fall in foreign orders and slower expansion of output, dampening hopes of economic rebound at the start of the year, survey results from Markit Economics showed Monday.

The HSBC flash Manufacturing Purchasing Managers' Index dropped to 50.4, a 4-month low, from 52.3 in January, confounding expectations for a rise in reading to 52.3 in February.

Likewise, the manufacturing output index came in at 50.9 in February, down from 53.1 in the prior month.

Output and new orders grew at a slower pace. Meanwhile, new export orders and backlog of work reversed the trend and declined in February from a month ago. Employment in the manufacturing sector increased, but at a slower rate.

Inflationary pressure remains in the economy, with both output and input prices increasing from the previous month. Nonetheless, inflation growth eased in February.

A recent survey by the Conference Board also indicated that current rebound in activity was only modest. The leading index accelerated in January but it was driven by consumer expectations and estimated real estate activity, which were positively affected by the Chinese New Year holiday.

However, Hongbin Qu, chief economist, China & co-head of Asian Economic Research at HSBC said the economy is still on track for a gradual recovery.

"The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth," Qu added.

Moody's Investors Service last week said that China's economy is recovering and a hard landing is becoming more and more an unlikely and distant possibility.

Official figures published last month revealed that China's gross domestic product grew 7.9 percent in the fourth quarter, ending seven-quarters of slowdown.

by RTT Staff Writer

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