Chinese factory recovery stalls in February on export order dip

 
Ben Southwood
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A TURNAROUND in export orders put the brakes on the Chinese manufacturing recovery during February, according to a prominent business survey released yesterday.

The health of China’s manufacturing sector was improving in the second month of 2013, according to Markit and HSBC’s purchasing managers’ index (PMI) for the Asian giant, but at a substantially reduced pace compared to January.

The headline PMI was 50.4, down from 52.3 a month before – a two year high – as export orders went from moderate increase to slight decline. A PMI of 50 indicates no change in conditions.

The speed of output growth fell with the prospects of the industry as a whole, with its sub-index dipping from 53.1 in January to 50.9 in February.

“The Chinese economy is still on track for a gradual recovery,” said HSBC economist Hongbin Qu. “Despite the moderation of February’s flash PMI, the index recorded the fourth consecutive reading above the critical 50 line.”

“The underlying strength of the Chinese recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth,” Qu added.

The Chinese economy managed to beat its 7.5 per cent growth target in 2012, expanding 7.8 per cent over the year, but this was the slowest annual rate in 13 years.

But analysts expect a pick-up to 8.1 per cent over the next year, according to a poll carried out yesterday, as the US recovery carries on, and the Eurozone makes its way past the worst of its sovereign crisis.

Outgoing Chinese President Wen Jiabao will present its 2013 growth target – expected to stay at 7.5 per cent – when the premier officially hands over power to incoming leader Xi Jinping at the 5 March official opening of parliament.