Purchasing index shows manufacturing still in decline

Manufacturing activity in China shrank for a fourth consecutive month in January as exports continued to decline and companies ran down stockpiles of raw materials, Bloomberg reported. The purchasing managers’ index rose to a seasonally adjusted 45.3 in January, up from 41.2 in December, according to the China Federation of Logistics and Purchasing. Although the index was up on the previous month, it still sits below 50, which indicates a contraction. Zhang Liqun, an economist at the State Council Development and Research Center, said the figures were evidence that the economy has reached a bottom and is now recovering. Zhang pointed to the output index rising to 45.5 from 39.4 in December, while the new order index climbed to 45 from 37.3 and the unemployment index dropped to 43.0 from 43.3. In November, those indexes all fell to the lowest levels since the survey began in 2005. A separate purchasing managers’ index, published by CLSA, showed manufacturing contracted for a sixth month in January.