Chinese manufacturing activity dips to six-month low

In January, in what continues to be a poor start to the year for the world's second biggest economy conditions for the Chinese manufacturing sector worsened.

The Markit/HSBC purchasing managers' index (PMI) fell to its lowest level in six months to 49.5 in January from 50.5 in December. The number has slipped below the 50-level - showing a contraction.

The survey also showed that companies were slashing jobs at the fastest rate since March 2009.

Hongbin Qu, chief economist for China at HSBC, in a statement:

A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January.

Policymakers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed.

The primary reason for the fall in the headline number was a decline in new orders, with output weaker than last week's flash estimate suggested. Looking ahead, the weak numbers do not necessarily represent bad news for the Asian giant as the country embarks on a series of economic reforms.

Julian Evans-Pritchard, assistant economist, Capital Economics commented:

The manufacturing slowdown is a natural result of slowing credit growth and investment spending, which in the long-run will put China's economy on a more sustainable path.