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China Manufacturing Data Hovers Above Recessionary Levels Posting a Six Month Low

“A Chinese manufacturing gauge fell to a six-month low in January as output and orders slowed, adding to signs that government efforts to rein in excessive credit will cool growth in the world’s second-largest economy.

The Purchasing Managers’ Index was at 50.5, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Saturday in Beijing. That matched the median estimate of analysts surveyed by Bloomberg News and compared with December’s 51 reading. Numbers above 50 signal expansion.

The survey showed jobs and export orders shrinking, amplifying risks of a deeper slowdown as Communist Party leaders clamp down on the $6 trillion shadow-banking industry and interbank borrowing costs rise. A separate manufacturing gauge released by HSBC Holdings Plc and Markit Economics last week pointed to the first contraction in six months.

“There is no doubt that the surging money-market rates have added uncertainty and dampened industry confidence,” said Liu Li-Gang, chief Greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. The central bank will “have to strike a delicate balance” between cracking down on shadow banking and maintaining financial stability, Liu said.

China was scheduled to issue a report on January’s non-manufacturing PMI Monday morning. That gauge fell to a four-month low in December.

Estimates for the official manufacturing PMI from 31 economists ranged from 50 to 50.9. The benchmark Shanghai Composite Index fell 0.8 percent on Jan. 30, capping the worst start to a year since 2010, on concern the economy is slowing as the U.S. Federal Reserve cuts stimulus. China’s markets are closed for the Lunar New Year holiday from Jan. 31 to Feb. 6.

Output Gauge

A gauge of output in January fell to a four-month low of 53 from 53.9, while the new-orders index declined to a six-month low of 50.9 from 52.0, according to government data.

The survey suggested manufacturing jobs are shrinking at a faster pace, with a gauge of employment declining to 48.2, the lowest since February 2013. HSBC’s survey showed companies eliminating jobs at the fastest rate in almost five years.

HSBC’s broader index, which showed a reading of 49.5 for January, is based on responses from more than 420 manufacturers and is weighted more toward smaller companies. The official PMI is based on questionnaires sent to about 3,000 companies.

Borrowing costs remain elevated, with the benchmark seven- day repurchase rate at 4.98 percent on Jan. 30, according to a daily fixing compiled by the National Interbank Funding Center, compared with the month’s average of 4.7 percent.

Tighter Credit….”

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