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China's manufacturing growth slows in December
By Wang Yanlin |
December 30, 2010, Thursday
|
Online Edition
Online Edition
CHINESE manufacturing activities in December grew at the slowest pace in three months under the pressure of a moderating economy and soaring inflation, an HSBC survey showed today.
The seasonally adjusted HSBC Purchasing Managers Index, a comprehensive gauge of industrial activities across the country, fell to a three-month low of 54.4 in December, compared with 55.3 in November.
A reading above 50 indicated an expansion.
Although the December data still pointed to a continued improvement of Chinese manufacturing sector, the sector's overall growth seemed to be losing momentum, said Qu Hongbin, chief economist and co-head of research at HSBC.
"Inflation rather than growth remains as the top policy concern, despite the moderation in December's manufacturing PMI reading," Qu said. "We expect China to continue to rely on quantitative tightening measures to curb inflation and counter the impact of easing policies in the United States."
Qu said more interest rate increases are needed to anchor inflationary expectations in the coming months.
China has lifted interest rates twice in the past three months to tame surging consumer prices, which shot to a 28-month high of 5.1 percent in November.
The survey showed that the input prices under the HSBC PMI reading increased for the fifth month running in December. Despite falling to a three-month low, the index was at a level indicative of a considerable rate of input cost inflation.
The HSBC said survey respondents widely commented on higher energy and fuel prices at the end of 2010, and some also noted increased costs of raw materials, with basic metals mentioned in particular.
Factory-gate prices set by Chinese manufacturing firms increased further in December, with almost 19 percent of firms reporting a price rise from the previous month, citing the need to pass on higher costs to clients.
The seasonally adjusted HSBC Purchasing Managers Index, a comprehensive gauge of industrial activities across the country, fell to a three-month low of 54.4 in December, compared with 55.3 in November.
A reading above 50 indicated an expansion.
Although the December data still pointed to a continued improvement of Chinese manufacturing sector, the sector's overall growth seemed to be losing momentum, said Qu Hongbin, chief economist and co-head of research at HSBC.
"Inflation rather than growth remains as the top policy concern, despite the moderation in December's manufacturing PMI reading," Qu said. "We expect China to continue to rely on quantitative tightening measures to curb inflation and counter the impact of easing policies in the United States."
Qu said more interest rate increases are needed to anchor inflationary expectations in the coming months.
China has lifted interest rates twice in the past three months to tame surging consumer prices, which shot to a 28-month high of 5.1 percent in November.
The survey showed that the input prices under the HSBC PMI reading increased for the fifth month running in December. Despite falling to a three-month low, the index was at a level indicative of a considerable rate of input cost inflation.
The HSBC said survey respondents widely commented on higher energy and fuel prices at the end of 2010, and some also noted increased costs of raw materials, with basic metals mentioned in particular.
Factory-gate prices set by Chinese manufacturing firms increased further in December, with almost 19 percent of firms reporting a price rise from the previous month, citing the need to pass on higher costs to clients.
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