SHANGHAI, Feb 2 (Reuters) - Activity in China’s factory sector shrank for a second month in January, a private business survey showed on Monday, as the new year got off to a rocky start for the world’s second largest economy.
The final HSBC/Markit Purchasing Managers’ Index (PMI) for January came in at 49.7 on a seasonally adjusted basis, just below the 50.0 level that separates growth from contraction. The number was slightly lower than a preliminary “flash” reading of 49.8 but a tad higher than the final 49.6 for December.
A similar survey released by the government on Sunday showed China’s factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January, to 49.8, and firms saw more gloom ahead.
January’s slack performance, including a 15th month of shrinking factory employment, will add to the debate over how and whether Beijing will accelerate policy easing. Most bank economists call for a combination of rate cuts and increased liquidity to spur productive investment.
While jobs shrank again, the rate slowed, with the subindex reading at 49.5 in January compared to 49.3 in December.
Regardless, the slide is keeping pressure on Beijing to increase the pace at which workers migrate from once high-paying factory jobs into services, a challenging proposition given weak investment in retraining.
Output prices recovered for the first time since October, although only marginally, with muted demand keeping a lid on growth.
Hurt by a sagging property market, unsteady exports and cooling domestic demand and investment, China’s economic growth is expected to slow further to 7 percent this year. (Reporting by Pete Sweeney; Editing by Richard Borsuk)