HSBC China Composite PMI™ data (which covers both manufacturing and services) signalled an expansion of total output for the sixth successive month in January. However, the rate of growth eased to a marginal pace that was the weakest in the current sequence. This was signalled by the HSBC Composite Output Index posting at 50.8 in January, down from 51.2 in December.


Production levels rose at Chinese manufacturers in January. That said, the rate of expansion eased to the weakest in four months and was only slight. Service providers also signalled increased business activity in January. However, the HSBC China Services Business Activity Index signalled only a marginal increase of activity and posted at 50.7 in January, down from 50.9 in December.

Latest data signalled that total new business placed at Chinese goods producers was little changed from the previous month in January. Meanwhile, Chinese service providers reported a further expansion of new order books over the month. That said, it was the weakest rise in new business since last June. As a result, total new orders rose marginally at the composite level.

Employment data for January continued to signal divergent trends across China’s manufacturing and service sectors. Manufacturers reported further job shedding over the month, while service providers noted a slight increase in staff numbers. Furthermore, it was the strongest reduction of payroll numbers in the manufacturing sector since March 2009. At the composite level, employment declined slightly for the third successive month.

Outstanding business at manufacturing plants increased for the sixth month running in January. However, the rate of accumulation eased to a fractional pace that was the weakest in the current sequence. In contrast, service providers reported a further reduction of outstanding work in January. Though slight, it was the fastest rate of backlog depletion since April 2013. Consequently, the level of work-in-hand fell marginally at the composite level.

Total input costs faced by Chinese manufacturers fell for the first time in six months during January and at a marked pace. Meanwhile, service providers signalled a moderate increase in cost burdens at the start of 2014, though the rate of inflation was well below the historical average. As part of efforts to boost sales, both manufacturers and service providers cut their selling prices in January. Moreover, it was the strongest rate of discounting in the service sector since June 2012.


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