According to the latest research from NTC Economics and CLSA, the January Purchasing Managers’ Index (PMI) for China fell to 52, its lowest level in ten months.
“The Chinese economy continues to expand in the face of tightening monetary policy. On our estimates, monetary conditions in China have tightened by the equivalent of 300 basis points over the last five months,” said Dr. Jim Walker, Chief Economist at CLSA. “This is showing up in the PMI in a slower rate of growth of manufacturing industry.”
Output was at a three-month low and the new orders index was also sluggish. Inflation put pressure on input and output prices, but employment was on the rise.
“New orders, led by export orders, have been trending down for three months although they remain above the 50 boom-bust line. We would expect to see slower growth in the first half of this year,” commented Walker. “Meanwhile, inflation pressures continue to bubble under the surface. Input prices have risen every month since January 2006 and output prices, while lagging, are rising steadily too. We should expect more monetary tightening in the near future.”
NTC Economics and ABN AMRO also released Thursday the India PMI. For January, the index was 55.3, down slightly from December’s 56.6. Combined with a new orders index of 59.7 and an output index of 58.1, the PMI shows continued expansion in the region.
Employment growth was stable, but still hovered around the 50 mark. And while inflation was at the lowest point in 17 months, input prices were still increasing.
For more information on the China PMI, click here.
For the India PMI, click here.