Expansion has been the trend over the past several months. The sudden reversal could have several causes. The first among these is that estimates of China’s economic activity are notoriously inaccurate because of the quality of the data. The second is that global demand may have slowed due to Europe, Japan and the “uneven” U.S. recovery.
The Wall Street Journal reports:
“The Chinese economy is still on track for a gradual recovery,” HSBC economist Qu Hongbin said in a statement. He noted that the February reading still marks the fourth straight month that the index has been above the boom-bust line at 50, showing that manufacturing still grew in February, just at a slower pace than in January.
“The slower pace of manufacturing expansion partly reflects the impact of a week-long Chinese New Year holiday and partly the continued softness of external demand,” Mr. Qu said.
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