China's PMI drops to 6-month low in February

Updated: 2011-03-01 10:13
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China's PMI drops to 6-month low in February

BEIJING - China's manufacturing sector purchasing managers index (PMI) fell to a six-month low of 52.2 percent in February, compared with 52.9 percent in January, the China Federation of Logistics and Purchasing (CFLP) said Tuesday.

The index has now slid three months in a row but has kept above the boom-and-bust line of 50 percent for 24 consecutive months.

Analysts said the week-long Spring Festival holiday, which started on Feb 2, and the government tightening measures led to the PMI decline.

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Wang Qing, chief economist for Greater China with Morgan Stanley, said China's manufacturers may soon hike the prices of their products as commodity prices in global markets have risen amid growing demand from China's manufacturing sector for raw materials.

Wang said the oil supply shortage caused by turmoil in the Middle East would add to China's inflation pressure in the months to come.

China's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent year on year in January, while the producer price index (PPI), an inflation measure at the wholesale level, rose 6.6 percent in the same month.

Cai Jin, vice president of CFLP, said though China still faces huge inflationary pressure, it was unlikely that inflation would jump sharply in the country in the months to come.

The PMI is a package of indexes that measure the performance of a country's manufacturing sector. A reading above 50 percent indicates economic expansion. One below 50 percent indicates contraction.