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China factory gauge weakened amid pollution, leverage campaigns

[BEIJING] China's official factory gauge missed estimates as efforts to rein in debt and reduce pollution dragged on activity.

The manufacturing purchasing managers index slipped to 51.3 in January, compared with a 51.6 forecast in a Bloomberg survey of economists and 51.6 the prior month, the National Bureau of Statistics said Wednesday.

The non-manufacturing PMI rose to 55.3 from 55 in December. A new composite index covering both services and manufacturing was released for the first time; it stood at 54.6.

Numbers above 50 indicate improving conditions while those below signal deterioration.

sentifi.com

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The economy capped its first full-year acceleration since 2010 amid a broad global recovery and industrial reflation. While the earliest indicators signal a solid start for this year, policies to purge pollution and excessive borrowing may weigh on growth in coming months, testing policy makers' resolve to clean up both the environment and the financial system.

"Today's reading indicates a slowdown in growth momentum," said Raymond Yeung, chief greater China economist for Australia & New Zealand Banking Group in Hong Kong. "This number is supportive to further reforms."

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