China’s manufacturing growth slowed for a second month in January after the central bank raised interest rates and as millions of migrant workers returned to their villages before a Lunar New Year holiday.
The Purchasing Managers’ Index fell to 52.9 from 53.9 in December, the China Federation of Logistics and Purchasing said in a statement on its website. That was less than the median estimate of 53.5 in a Bloomberg News survey of 13 economists.
Premier Wen Jiabao aims to sustain growth while intensifying a campaign against real-estate speculation and fighting inflation that may have accelerated last month after storms disrupted food supplies. In today’s data, a rebound in an index of input costs underscored why companies from Baoshan Iron & Steel Co to Starbucks Corp have raised prices.
“Intensifying inflation pressure shows the government may need to strengthen policy tightening,” said Isaac Meng, a Beijing-based economist at BNP Paribas. He added that the central bank may boost benchmark rates immediately after the holiday, which begins tomorrow and ends February 8.
The yuan strengthened for the first day in four, trading at 6.5920 per dollar as of 10.13 am in Shanghai.
Bank of America Merrill Lynch economist Lu Ting said the data were heavily distorted by the holiday and there are “no big worries on growth.”
Export orders
Indexes for output, new orders and new export orders fell and a measure of employment slid to 49, the lowest reading since March 2009. The input-price index rose to 69.3 from 66.7 in December as food costs climbed.
In the statement, Zhang Liqun, a senior researcher at the State Council’s Development Research Center, said that companies face “difficulties” as cost pressures intensify and new orders grow at a slower pace.
