The case for China to join the latest wave of global monetary easing has increased, with a manufacturing gauge signaling the first contraction in more than two years.
The government’s Purchasing Managers’ Index fell to 49.8 last month from 50.1 in December, missing the median estimate of 50.2 in a Bloomberg survey of analysts and below the 50 level separating expansion and contraction. The slide follows the biggest weekly stock market drop in a year and fiscal data that showed the weakest revenue growth since 1991.
Central banks from the euro zone to Canada and Singapore last month added monetary stimulus as slumping oil prices damp the outlook for inflation and global momentum outside the U.S. moderates. China’s central bank, which cut interest rates in November for the first time in two years, has since added liquidity in targeted measures rather than with follow-up rate reductions or cuts to banks’ required reserve ratios.