China manufacturing activities may contract

Beijing Bulletin (IANS) Wednesday 22nd February, 2012

China's manufacturing activities may contract in February as export orders fell sharply, experts said Wednesday.

The HSBC Flash PMI (Purchasing Managers' Index) stood at 49.7 Wednesday. It reached a four-month high but was still less than 50, which separates expansion and contraction.

The pace was faster than the final reading of 48.8 in January.

"Growth will continue to slow down, despite a marginal improvement in the headline flash PMI led by quickened production after the Chinese New Year," said Qu Hongbin, chief economist for HSBC China.

"With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth."

He suggested the central bank to step up policy easing as inflation pressures may continue to weaken, the Shanghai Daily reported.