HSBC survey finds China factory activity shrinks for second straight month

Published May 21, 2015

China's manufacturing shrank for a second month in January, further evidence that momentum in the world's second-biggest economy remains weak after posting its slowest growth in more than two decades.

HSBC said Friday its preliminary index of manufacturing activity, based on a survey of factory purchasing managers, rose to 49.8 from 49.6 in December. Reading less than 50 on the index's 100-point scale indicate manufacturing is contracting.

The report comes days after official data showed the economy expanded 7.4 percent last year, the slowest pace since 1990.

The growth rate slipped from 7.7 percent the year before and signals increasing headwinds for the global economy.

The report found that China's factories, which play an outsize role in the economy, cut jobs and lowered prices at a faster rate in January.

The latest data "suggest that the manufacturing slowdown is still ongoing amid weak domestic demand," said HSBC's Chief China Economist Qu Hongbin. "More monetary and fiscal easing measures will be needed to support growth in the coming months."

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