China December manufacturing index falls to 7-month low: HSBC

[BEIJING] China's manufacturing activity worsened in December, HSBC said Tuesday, with its closely watched purchasing managers' index (PMI) hitting a seven-month low.

The British banking giant's preliminary PMI for the month came in at 49.5, below the break-even point dividing expansion and contraction, the bank said in a statement.

The result, compiled by information services provider Markit, was lower than November's final reading of 50.0 and the weakest result since May's 49.4.

The index tracks activity in China's factories and workshops and is a closely watched indicator of the health of world's second-largest economy, a key driver of global growth.

"The manufacturing slowdown continues in December and points to a weak ending for 2014," Qu Hongbin, HSBC's chief economist for China, said in the statement.

"The rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months." HSBC will publish its final reading for December on January 2, it said.

The preliminary PMI result came after China's economy in the third quarter grew at its slowest pace since the global financial crisis. It has showed continued weakness in the current fourth quarter.

The central People's Bank of China last month cut interest rates for the first time in more than two years to jolt slowing growth, with analysts expecting further easing steps.

China's official PMI released by the National Bureau of Statistics came in at 50.3 in November, the weakest since an identical reading in March.

The government on Friday announced that industrial output expanded at its slowest pace in three months in November, while retail sales and fixed asset investment data also pointed to weakness.

The data came after a key annual meeting last week where China's top leaders stressed the need to adapt to the economy's "new normal" - an increasingly popular official expression for slower but more sustainable growth.

AFP