China Manufacturing Sinks to Six-Month Low: Happy New Year

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By Trey Thoelcke Published
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Chinese manufacturing is in retreat for the first time in six months, according to British banking giant HSBC. The purchasing managers’ index (PMI), which tracks manufacturing activity in workshops and factories, fell from a December reading of to 50.5 to 49.5 in January. That also was a tick down from the preliminary 49.6 reading for January. Any reading below 50 signals a contraction.

The press release said:

The deterioration of the headline PMI largely reflected weaker expansions of both output and new business over the month. Firms also cut their staffing levels at the quickest pace since March 2009.

In addition, new export orders fell for the second straight month.

But the report also cautioned against reading too much into the numbers at this time of year, because year-to-year shifts in the timing of Chinese New Year make seasonal adjustment less accurate. Shops, offices and factories across the country are largely shut down during the week-long Lunar New Year holiday.

In 2013, Chinese economic growth slowed to its lowest level since 1999. Any further contraction in manufacturing would be fresh evidence of an economic slowdown in China. The outlook for China could be key to stabilizing emerging markets, according to some analysts. Emerging markets have been crushed by an outflow of foreign funds as the U.S. Federal Reserve winds down its monetary stimulus.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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