China manufacturing growth plunges after big gains in January
2013-02-27 12:40:52
A key indicator of the Chinese manufacturing industry has hit a four year low, according to banking giant HSBC.
HSBC's preliminary China manufacturing purchasing managers' index, a forward estimate on next week's final number, fell from 52.3 last month to 50.4 in February.
While the result represents a significant drop on January's performance, HSBC said the result was still positive.
“The Chinese economy is still on track for a gradual recovery,” HSBC analyst Qu Hongbin said in a statement.
“The underlying strength of Chinese growth recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth.”
A reading above 50 indicates expansion from the previous month, and analysts said a drop in demand for the country's exports, as well as the Chinese lunar new year holidays, were party to blame for the weak results.
“Although the HSBC PMI is seasonally adjusted, the different timing and evolving size of the Chinese new year distortion each year makes it near impossible to eliminate,” Qu said.
In a sign of the economic instability clouding Asia, last month's PMI showed China's manufacturing sector had expanded at its fastest pace in two years.