Highlight China Feb HSBC PMI at 7-month high but export orders shrink

by **Cals** Tue 03 Mar 2015, 00:20

Highlight
China Feb HSBC PMI at 7-month high but export orders shrink

By Reuters / Reuters | March 2, 2015 : 9:56 AM MYT

BEIJING (March 2): Activity in China's factory sector edged up to a seven-month high in February but export orders shrank and deflationary pressures persisted, a private business survey showed on Monday, underlining economic fragility that may need more policy support.

The final [size=14]HSBC/Markit Purchasing Managers' Index (PMI) climbed to 50.7 in February - the highest level since July - from 49.7 in January, as overall new orders picked up.

The number was stronger than a preliminary reading of 50.1, just above the 50-point level that separates growth in activity from a contraction on a monthly basis.

But the survey showed manufacturers still faced formidable headwinds. The new export orders sub-index dipped to 48.5 in February - the sharpest contraction in a year - while both input and output prices declined for a seventh month.

Manufacturing employment contracted for a 16th month, although the pace of job shedding moderated in February.

"China's manufacturing sector saw an improvement in overall operating conditions in February, with companies registering the strongest expansion of output since last summer while total new business also rose at a faster rate," said Annabel Fiddes, an economist at Markit.

"However, the renewed fall in new export orders suggests that foreign demand has weakened, while manufacturers continued to cut their staff numbers (albeit fractionally)."

An official survey released on Sunday showed China's factory sector contracted for a second straight month in February on unsteady exports and slowing investment.

The central bank cut interest rates on Saturday, just days before the annual meeting of the country's parliament, in the latest effort to support the world's second-largest economy as its momentum slows and deflation risks rise.

China expanded 7.4 percent in 2014 - the weakest pace in 24 years - and is widely expected to grow around 7 percent in 2015. - Reuters
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