CHINA’S MANUFACTURING GROWTH

CHINA’S MANUFACTURING EXPANDS AT BELOW-FORECAST PACE: ECONOMY

Bloomberg News

Bloomberg, March 1, 2013

Two Chinese manufacturing indexes showed a slower-than-estimated pace of expansion, a signal the nation’s economic recovery may be losing steam.

The official Purchasing Managers’ Index was 50.1 in February, the weakest in five months and down from 50.4 in January, a report from the National Bureau of Statistics and China Federation of Logistics and Purchasing showed today in Beijing. A separate gauge from HSBC Holdings Plc and Markit Economics dropped to a four-month low of 50.4 from 52.3. Readings above 50 indicate expansion.

Contractions at small and mid-sized manufacturers in the official survey underscore the headwinds China’s new government will face when it takes power this month after the annual session of parliament. Li Keqiang, set to become premier, faces the task of sustaining a rebound in growth without triggering a resurgence in inflation and banks’ bad debts.

“The recovery is obviously weak,” said Xie Dongming, a China economist at Oversea-Chinese Banking Corp. in Singapore. “The official PMI is almost at the line between expansion and contraction and seasonal factors from the Chinese New Year holidays alone can’t explain this.”

The official index compares with the 50.5 median estimate in a Bloomberg News survey of 31 analysts. The median forecast of 14 economists for the HSBC gauge was 50.6, after a preliminary reading of 50.4 issued Feb. 25. A measure of new orders in the government survey fell to 50.1, a five-month low, while export orders showed a second month of contraction.

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