The HSBC Purchasing Managers’ China PMI Index shows modest deterioration of business conditions in February.

Key points

  • Both output and new orders decline for the first time since July 2013
  • Payroll numbers are cut at fastest rate since March 2009
  • Solid reduction of output charges

Chinese manufacturers signalled reductions of both output and new business in February, leading to a moderate deterioration of overall operating con ditions. As a result, firms cut their staffing levels again in February and at the quickest pace in nearly five years. Meanwhile, input costs and output charges both declined at their fastest rates in eight months.

After adjusting for seasonal factors, such as the recent Chinese New Year festival, the HSBC Purchasing Managers’ Index™ (PMI™) posted at 48.5 in February, up fractionally from the earlier flash reading of 48.3 , and down from 49.5 in January. This signalled a moderate deterioration in the health of the Chinese manufacturing sector.

February data signalled the first contractions of both output and new orders at Chinese manufacturers since July 2013. The rates of decline were moderate in both cases, and were linked by panellists to weaker-than-expected client demand.

New business from abroad also declined over the month, and at a modest pace that was little-changed from January. Lower output requirements and fewer new orders led to a fourth successive monthly fall in staffing levels at Chinese goods producers in February. Furthermore, the rate of job shedding was the quickest since March 2009.

Mike “Mish” Shedlock