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HSBC Flash PMI drops due to Spring Festival holiday
Aggregated Source: Shanghai Daily: Business

CHINA'S manufacturing activities may see growth moderate to a four-month low in February due to the Spring Festival holiday distortion, an HSBC survey showed today.
The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of industrial sector vitality, dropped to 50.4 this month, compared with 52.3 in January, which was the fastest growth in two years.
A reading above 50 means expansion. February may be the fourth consecutive month that the index, which is slanted towards private and export-oriented firms, points to an expansion.
Qu Hongbin, chief economist for China at HSBC Holdings Plc, said China's economy was still on track for a gradual recovery.
"Despite the moderation of February's Flash PMI, the underlying strength of the economy's recovery remains intact, as indicated by the still expanding employment and the recent pick-up of credit growth," Qu said.
The component indices under the HSBC Flash PMI showed that output, new orders and employment all hovered above 50 this month, which means increasing business and jobs.
Chang Jian, an economist at Barclays, said the index showed that beyond the distortions related to the Chinese Lunar New Year, the growth recovery in the country remains on track, helped by industry restocking from the supply side and domestic demand.
"We think room for further monetary easing is very limited given rising inflation and property prices," Chang said. "But a benchmark interest rate increase is also unlikely due to current moderate growth as well as manageable inflation mix."
China's gross domestic product quickened to 7.9 percent in the fourth quarter of last year, ending a seven-quarter slowdown after the government cautiously relaxed its monetary policy and fast-tracked some big investment projects.
The Consumer Price Index, the main gauge of inflation, slowed to 2 percent in January after touching a seven-month high of 2.5 percent in December.

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