China’s economy might be weaker than many presume. This evening the HSBC China Manufacturing PMI missed at 49.5 after the flash PMI of 49.6 and Credit Suisse sees 2014 GDP falling to 7.3% from their prior estimate of 7.7%. Q1 is expected to be particularly weak at 6% annualized. Given the dependency of many emerging markets on Chinese growth this has the potential to compound recent worries.
Here’s more detail from HSBC:
- Growth of output eases to marginal pace
- Quickest rate of job shedding since March 2009
- Marked falls in input costs and output charges
Commenting on the China Manufacturing PMI™ survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said:
“A soft start to China’s manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January. Policy makers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed.”
Source: Markit Economics/HSBC