China
Written on February 1, 2008
Manufacturing in China, the world's fastest-growing major economy, cooled in January as growth in shipments overseas slowed.
The Purchasing Managers' Index fell to 53 from 55.3 in December, the China Federation of Logistics and Purchasing and the National Bureau of Statistics said today in an e-mailed statement. A CLSA Asia-Pacific Markets PMI index slipped to 53.2 from 53.3.
Exports grew at the slowest pace since 2002 in the fourth quarter, indicating that recent yuan gains, the cooling global expansion and cuts to some export-tax incentives are biting. A bout of extremely cold weather that caused shortages of coal and electricity this week is likely to slow growth further.
“The index of export orders dropped significantly — this may indicate a further slowdown in export growth and be a drag to economic expansion,'' said Zhang Liqun, a senior research fellow at the State Council's Development Research Center.
Industrial activity is beginning to slow across the region. Manufacturing in Australia shrank for the first time in almost two years after raw-material costs increased and financial markets slumped.
Cold Weather
China's economy may cool further this quarter. Extreme weather, including snowfalls, sleet and the temperature drop this month will cut economic growth by 0.5 percentage point, and push up inflation by 0.3 percentage point, China Securities Journal said.
The blizzards have led to shortages of coal, electricity and oil, and will hurt the country's economy in the short term, the state-run Xinhua News Agency-affiliated newspaper said, without giving details online payday advance.
China's gross domestic product rose 11.2 percent in the three months ended Dec. 31, compared with 11.5 percent in the third quarter.
The moderate slowdown in economic growth reported in the fourth quarter has been continued into the first quarter of 2008, said Eric Fishwick, head of economic research at CLSA who's based in Singapore.
Moderate Exports
The CLSA survey showed that export orders increased in January to 52.4 from 51.7.
The pick-up in export orders was “modest' and Chinese exporters are facing pressure from the export rebate cuts and rising currency, CLSA said.
Goldman Sachs Group Inc. cut its estimate for China's economic growth in 2008 this month, citing weaker demand because of the U.S. economic slowdown.
The government index is based on a survey of more than 700 companies in 20 industries, including energy, metallurgy, automobile manufacturing and electronics. The CLSA index interviews more than 400 firms. A reading above 50 reflects an expansion in business activity and a reading below 50 indicates a contraction.
The surveys track changes in output, new orders, export orders, employment, inventories, input costs and output prices. The data is seasonally adjusted.
The output index dropped to 56.1 in January from 59.5 in December while the index of new orders declined to 55.2 from 59.6, the government report said. The index of export orders fell to 49 from 54.3.