China factories stall for second month in January, prices fall: HSBC Flash PMI

[BEIJING] China's manufacturing growth stalled for the second straight month in January and companies had to cut prices at a faster clip to win new business, adding to worries about growing deflationary pressures in the economy, a private survey showed.

The HSBC/Markit Flash Manufacturing Purchasing Managers' Index (PMI) hovered at 49.8 in January, little changed from December's 49.6 and a whisker below the 50-point mark that separates growth from contraction on a monthly basis.

A Reuters poll had forecast a reading of 49.6.

Reflecting the tumble in oil prices, which have more than halved in the last six months, a sub-index for input prices sank to 39.9, a level not seen since March 2009.

But companies also had to reduce prices for the sixth straight month and more deeply than in December.

Falling prices are a concern for China, which wants to avoid Japan's fate of sinking into a 20-year-long deflationary cycle that has depressed consumption and economic growth.

REUTERS