Asia Economy
China’s manufacturing shrunk in January; Regional rise except Indonesia
By Michael Hennigan, Finfacts founder and editor
Feb 2, 2015 - 5:07 AM

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China’s manufacturing sector contracted in January, according to reports on Sunday and Monday, providing further evidence of a slowdown in the world’s second largest economy.

The HSBC manufacturing purchasing managers index, fell slightly to 49.7 for January, compared with 49.6 in December, HSBC said Monday. The 50 mark is the break even point.

On Sunday the Chinese government’s official PMI, which mainly tracks big state enterprises, fell to 49.8 for January, the first reading below 50 since 2012.

Hongbin Qu, chief economist, China & co-head of Asian Economic Research at HSBC said:  "The HSBC China Manufacturing PMI (purchasing managers' index) rose to 49.7 in the final reading for January, from 49.6 in December, and revised down from the flash reading of 49.8. Both new orders and new export orders saw downward revisions, but still signalled marginal expansion. We think demand in the manufacturing sector remains weak and more aggressive monetary and fiscal easing measures will be needed to prevent another sharp slowdown in growth."

Data at the start of 2015 signalled a solid improvement in operating conditions in the Japanese manufacturing sector. Production growth continued for the sixth month running, supported by a further rise in new orders. Subsequently, payroll numbers remained in growth territory, with the latest expansion broadly in-line with the previous month. Meanwhile, upward pressures on both input and output prices remained. The headline Markit/JMMA Japan Manufacturing Purchasing Managers’ Index (PMI) is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

Despite falling from December’s two-year record of 54.5 to 52.9, the headline HSBC India PMI remained consistent with a solid improvement in business conditions in January. Moreover, the latest expansion was the fifteenth in as many months. Sector data highlighted consumer goods as the best performing of the three market groups for the third month in a row.

The HSBC South Korea PMI posted at 51.1 in January, up from 49.9 in December, thereby signalling a return to positive improvements in operating conditions in the South Korean manufacturing sector. Furthermore, the reading was above the crucial 50.0 no-change mark for the first time in five months and the highest recorded since May 2013.

Latest data from Indonesia indicated that the Indonesian manufacturing sector began 2015 in much the same way that it ended 2014, as business conditions deteriorated for the fourth consecutive month in January. That said, the rate of worsening eased from the prior month, with output and new orders falling at slower rates. Meanwhile, employment continued to decline and foreign orders fell at the sharpest rate in the survey’s history. Inflationary pressures from input costs and output charges remained pronounced. Despite picking up from December’s survey-record low of 47.6 to 48.5 in January, the headline HSBC PMI remained consistent with a moderate deterioration in business conditions at the start of 2015. Operating conditions have now worsened in five of the past six months.

The HSBC Taiwan PMI posted 51.7 in January, signalling a moderate improvement in the health of the sector at the start of 2015. Furthermore, it was up from December’s index reading of 50.0, which is consistent with a stagnation of operating conditions.


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