Manufacturing In China Slows

Growth Still Predicted In 2013

Manufacturing In China SlowsChina recorded a slowdown in its manufacturing sector in January, falling short of the projections of analysts and underscoring the economic challenges of the Asian superpower. The closely-watched Purchasing Managers' Index (PMI), released by China's Federation of Logistics, dropped slightly to 50.4 last month from 50.6 in December.

Data shows larger Chinese firms endured a greater January slowdown than smaller companies, a detail supported by a separate index produced by HSBC. Despite the deceleration in manufacturing, China's PMI still signifies growth, leading analysts to predict an improving economy for 2013. "We see increasing signals of a sustained growth recovery in the coming months," said HSBC economist Hongbin Qu.

While China's economy grew 7.8% in 2012, the expansion was the smallest since 1999. During a weak third quarter, China's PMI decreased for consecutive months before improving near the close of the year on the strength of better industrial output. Experts believe much of the Q3 slip was self-inflicted, caused by government controls meant to temper inflation in China.

Analysts also say Q1 PMI fluctuations are more common because of the effects of the Chinese New Year, a time when literally millions of migrant workers leave factories to return to their rural homes.