PMI drop after fall in orders

PMI drop after fall in orders

The FINANCIAL -- Conditions in China’s manufacturing sector deteriorated in February, according to the HSBC China Manufacturing Purchasing Managers’ Index. The index fell to 48.5, down from 49.5 in January. It was up from the Flash reading of 48.3 earlier in the month.


Both output and new orders dropped in February for the first time since July 2013. As a result, businesses reduced their staffing levels at the quickest pace in nearly five years.  Input costs and output charges declined at their fastest rate in eight months. New export orders also fell but at a modest pace, according to HSBC Group.


“The final reading of the HSBC China Manufacturing PMI confirmed the weakness of manufacturing growth. Signs become clear that the risks to GDP growth are tilting to the downside. This calls for policy fine-tuning measures to stabilise market expectations and steady the pace of growth in the coming quarters,” Qu Hongbin, Chief Economist for Greater China and Co-Head of Asian Economic Research, HSBC, said.

 

Companies reduced purchasing activity largely because of a drop in new orders. It is the first time that input buying has decreased since July 2013, according to HSBC Group.


The PMIs are based on data compiled from monthly replies to questionnaires sent to purchasing executives in manufacturing companies. A reading above 50 indicates expansion, while one below 50 signals contraction.

Conditions in India’s manufacturing sector improved in February, according to the HSBC India Manufacturing Purchasing Managers’ Index. The index rose to a 12-month high of 52.5, up from 51.4 in January, according to HSBC Group.

 

New orders increased for the fourth consecutive month, with higher demand from domestic and export clients. Employment rose for the fifth month. The best-performing sub-sector was consumer goods.

 

“Manufacturing activity picked up further in February. New order flows have firmed, with the improvement in external demand and the reduction in macroeconomic uncertainty since last summer. This, in turn, has provided a lift to output growth. However, the recovery in activity is still likely to prove protracted given the lingering structural constraints,” Leif Eskesen, Chief Economist for India and the Association of South East Asian Nations, HSBC, said.

 

 

Author: The FINANCIAL