China Manufacturing Contracted in February

China’s manufacturing sector contracted in February, according to a new report.

The HSBC Purchasing Managers’ Index (PMI), which measures activity in smaller factories, fell to 48.5 in February from 49.5 in January – with Chinese New Year a possible factor.

China’s official PMI, which was released on Saturday and measures activity in big factories, fell to an eight-month low in February of 50.2 from 50.5 in January.

A reading above 50 indicates expansion.

Manufacturing is a key driver of China’s growth, but the data may have been affected by the Chinese New Year when many factories were shut and workers went home in late January and early February.

Expectations for the official PMI survey were for a reading of 50.1, while the HSBC reading came in as expected, marking the third straight monthly decline and a seven-month low.

“Signs are becoming clear the risks to GDP growth are tilting to the downside,” Hongbin Qu, chief economist for China at HSBC, said in a statement.

“This calls for policy fine-tuning measures to stabilise market expectations and steady the pace of growth in the coming quarters.”

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza