January's flash PMI up but pace stays weak

China's manufacturing sector may stage a marginal rise in January but the slight improvement indicates that momentum remains weak in the world’s second-largest economy, a survey showed yesterday.

The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of China’s industrial sector, finished at 49.8 in January, up from December’s final reading of 49.6, according to HSBC and research firm Markit.

But the reading of under 50 signals manufacturing is contracting. It was also the second straight month that the PMI pointed to a deceleration of manufacturing activities.

“The data suggest that the manufacturing slowdown is still ongoing amidst weak domestic demand,” Qu Hongbin, chief economist for China at HSBC, said.

“More monetary and fiscal easing measures will be needed to support growth in the coming months,” he added.

The People’s Bank of China injected 50 billion yuan (US$8,05 billion) in the banking system on Thursday through the seven-day reverse repurchase agreement, a short-term tool it has not used in a year, to ease a seasonal cash squeeze as the central bank bids to stabilize the economy.

China’s gross domestic product expanded 7.3 percent from a year earlier in the fourth quarter of last year, better than earlier market hopes. The growth was flat from that in the previous three months.

Earlier data showed that China’s industrial production increased 8.3 percent last year. In December alone, factories reported a growth of 7.9 percent, up from a four-month low expansion of 7.2 percent in November.

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