China’s manufacturing growth slowed for the first time in five months in December as the government tightened monetary policy and chased energy-efficiency and pollution targets, a survey indicated.
A purchasing managers’ index released today by HSBC Holdings and Markit Economics fell to 54.4 from 55.3 in November. The data are seasonally adjusted and a reading above 50 indicates an expansion.
Rising corporate profits and expansions by companies including Aluminum Corp of China and Volkswagen may help to sustain manufacturing as the government curbs lending to counter inflation. Morgan Stanley and JPMorgan Chase & Co forecast interest rates will rise at least twice in the first half of 2011 after an increase on Christmas Day that was the second since the global financial crisis.
“Inflation rather than growth still remains as the top policy concern, despite the moderation in December’s manufacturing PMI reading,” said Qu Hongbin, Hong Kong-based China economist for
HSBC. “Modest” interest-rate increases are needed to anchor inflation expectations in coming months, Qu said.
The Shanghai Composite Index fell 0.4 per cent as of the 11.30 am local time break in trading. The yuan touched 6.6142 per dollar, the strongest since 1993.
