China manufacturing expansion slows in February

Manufacturing activity in China expanded at its slowest rate in five months in February, according to official data, but maintained the economic recovery despite the Chinese New Year holiday. The official purchasing managers' index (PMI) was 50.1 in February, the lowest since September when it stood at 49.8, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP). The figure was seasonally adjusted, they said, to mitigate volatility led by the week-long Lunar New Year holiday that fell in the middle of the month. PMI is a widely watched barometer of the health of China's economy, with a reading above 50 indicating expansion while anything below points to contraction. Zhang Liqun, a government analyst, said that the February PMI figures showed a rebound in the world's second-largest economy was likely to lose steam and stabilise in the coming months. "The February PMI extended a trend seen in January to decline modestly, indicating a rebound in economic growth will come to a stabilising point," Zhang said in a separate statement released by the CFLP. British bank HSBC said Friday that its final PMI for February was 50.4, unchanged from its preliminary reading and a four-month low. But it was also the fourth consecutive month of expansion after 12 months of contraction, according to the bank's figures. "China's recovery continues on improving domestic demand conditions and the labour market," said Qu Hongbin, a Hong Kong-based economist with HSBC, in a statement. "The pace of ongoing recovery is mild, implying no need for the People's Bank of China to tighten policy any time soon." Compared with the official report, the bank's survey, compiled by information services provider Markit and released by HSBC, focuses more on smaller enterprises. China's economy expanded 7.8 percent last year, its slowest pace in 13 years, in the face of weakness at home and in key overseas markets. The latest official figures show Chinese banks more than doubled their lending in January from December, granting 1.07 trillion yuan ($171.7 billion) worth of new loans, as Beijing seeks to boost growth.