“China’s manufacturing may shrink for a fourth month in February, indicating the world’s second- biggest economy remains vulnerable to a deeper slowdown as Europe’s crisis caps exports and the housing market cools.
The preliminary 49.7 reading of an index from HSBC Holdings Plc (HSBA) and Markit Economics today compared with a final 48.8 in January. A number below 50 points to a contraction. January and February economic data are distorted by a weeklong holiday.
China is cutting banks’ reserve requirements from Feb. 24 to support an economic expansion that Nomura Holdings Inc. estimates may be 7.5 percent this quarter, the least since the global financial crisis. In today’s report, a measure of export orders fell to an eight-month low, underscoring Commerce Minister Chen Deming’s Feb. 9 caution that the government is not optimistic about the outlook for trade after a decline in shipments in January.
“With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth,” said Qu Hongbin, a Hong Kong-based economist for HSBC. The central bank “should step up policy easing as inflation pressures continue to ease,” he added….”
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