More signs that China’s manufacturing sector is taking a bit of a breather, but not slowing too sharply.
The official manufacturing sector purchasing managers index (PMI) fell to a six-month low of 52.2 in February, compared with 52.9 in January, according to the country’s Federation of Logistics and Purchasing (CFLP).
It was the third monthly fall in a row, but the index remains above the expansion/contraction line of 50% and has now done for the past two years.
As well, the seasonally adjusted HSBC China’s PMI fell from 54.5 to a 7-month low of 51.7 in February, slightly up from the earlier estimate of 51.5, but still below the long-run trend of 52.3.
"The month-on-month drop in the index was one of the largest since the start of the series in April 2004", said Markit Economics today.
"Manufacturing production in China continued to increase during February, although the rate of expansion eased sharply to the slowest in the current seven-month period of growth. Moreover, the latest increase was only modest, and slower than the long-run series average", Markit said.
Analysts blamed the week-long Spring Festival/Lunar New Year holiday, which started on February 2, the government interest rate rise and the tightening of bank asset ratios for the small fall in the PMI.
The official PMI said a sub-index for input prices rose to 70.1 in February from 69.3 in the previous month, suggesting a continued increase in raw-material prices at factories.
HSBC’s PMI showed the out prices were rising at the their fastest pace in three months.
Of other sub-indexes in the official PMI, a measure of production eased to 53.8 from 55.3, while new orders cooled to 54.3 from 54.9.
With producer price inflation running at a high 6.1% and the CPI at 4.9% in the year to January, inflation remains a concern for the country’s leaders.
Manufacturing activity also slowed in Taiwan, where the HSBC Taiwan PMI dropped to 55.8, down from 59.8 in January.
But that could have been influenced by the holidays at the start of the month.
But in Japan we saw a faster rate of expansion with the Markit Japan Manufacturing Purchase Managers Index rising to 52.9 last month from 51.4 in January, according to the Markit Japan Manufacturing Purchasing Managers Index.
Meanwhile the value of the Yuan climbed to within sight of its all time high yesterday.
It jumped by almost 50 points to settle at a central rate of 6.5706 per US dollar, against 6.5752 on Monday.
That’s only one basis point away from the record high 6.5705 per US dollar set on February 21.
