China Feb flash HSBC PMI at 4-month high but export orders shrink

[BEIJING] Activity in China's mammoth factory sector edged up to a four-month high in February but export orders shrank at their fastest rate in 20 months, a private survey showed, painting a murky outlook that argues for more policy support.

The flash HSBC/Markit Purchasing Managers' Index (PMI) inched up to 50.1 in February, a whisker above the 50-point level that separates growth in activity from a contraction on a monthly basis.

Economists polled by Reuters had forecast a reading of 49.5, little changed from January's final PMI of 49.7.

But even as activity grew marginally, the survey suggested that manufacturers still faced considerable headwinds from weak foreign demand and deepening deflationary pressures.

The new export orders sub-index fell three hefty points from January to 47.1 this month, the sharpest rate of contraction since June 2013.

Weighed down by a cooling property market, industrial overcapacity and slowing investment, China's economy grew 7.4 per cent in 2014, its slowest expansion in 24 years. Economists expect growth to cool further to 7 per cent in 2015, even with additional stimulus measures.

REUTERS