Uptick in official PMI 'signals stabilization'

Updated: 2012-02-02 07:49

By Chen Jia and Wang Ying (China Daily)

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Uptick in official PMI 'signals stabilization'

Guangdong weakens

The PMI for export powerhouse Guangdong province declined to 43.7 in January from 50.5 in December. It was the first time that the index had dropped below 45 in more than a year.

Pressured by the problems in Europe, a stronger yuan and rising labor costs, many manufacturing companies in Guangdong closed or shifted to other industries in 2011, analysts said.

Zhang said that the world's second-largest economy might cool further this year amid the global gloom.

A report from JP Morgan (Hong Kong) Chase Bank said that first-quarter GDP would likely slow to 8.2 percent, compared with 8.9 percent in the fourth quarter and 9.1 percent in the third quarter.

Zhu Haibin, the chief China economist with JP Morgan, said that a strong economic recovery might emerge in the second half, "benefiting from the effects of domestic policy easing and the improvement in global economic environment".

The economy might also get a boost from fiscal policy, as the authorities would increase government expenditure and adopt structural tax cuts to expand sectors, including affordable housing, social welfare and infrastructure investment, Zhu said.

HSBC Holdings PLC released a separate index on Wednesday that portrayed quite a different scenario.

The bank's PMI came in at 48.8 for January, the third consecutive below-50 reading, compared with 48.7 in December, showing a continued contraction in the nation's manufacturing sector.

Zheng Caixiong in Guangzhou contributed to this story.

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