Surveys: China Manufacturing Lost Steam In January

Two reports show that Chinese manufacturing was anemic in January, adding to pressure on the government to roll out measures to boost the world's No. 2 economy. The final version of HSBC's purchasing managers' index released Monday edged up to 49.7 last month from 49.6 in December. It was the...

Two reports show that Chinese manufacturing was anemic in January, adding to pressure on the government to roll out measures to boost the world's No. 2 economy.

The final version of HSBC's purchasing managers' index released Monday edged up to 49.7 last month from 49.6 in December. It was the second straight month that the index, based on a survey of factory purchasing managers, showed a contraction in manufacturing. Readings above 50 on the index's 100-point scale indicate manufacturing is expanding.

HSBC's Chief China Economist Qu Hongbin said "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."

The private survey comes a day after an official index found that factory activity fell to a 28-month low in January.

The official China Federation of Logistics and Purchasing's report gives more weight to larger, state-owned companies while HSBC's survey is more focused on smaller, private businesses. Taken together, they paint a picture of widespread lethargy in China's outsized manufacturing industry.

China's economy expanded 7.4 percent last year, its slowest growth in nearly a quarter century. Economists expect growth to wane further in the next several years as leaders try to wean the economy off the heavy industry and manufacturing that have severely polluted the environment in favor of domestic consumption.

Meanwhile, demand from customers in many developed countries for the toys, electronics and furniture churned out by China's factories is slumping as the world economy struggles to recover.

"Relatively muted client demand, both at home and overseas, dampened new order growth," the HSBC report said.

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