Chinese manufacturing contracted for the first time in six months and jobs in the sector disappeared at the fastest rate in nearly five years in January, according to a survey.
AAP reports that HSBC’s purchasing managers' index (PMI), a key measure of manufacturing activilty, fell to 49.5 in January. The December reading was 50.5.
Readings above 50 indicate expansion in the sector, while readings under 50 indicate contraction. This is the first time since July last year (when the figure was 47.7) that the reading has dropped below 50.
According to The Australian, the survey also showed that production costs had fallen in January for the first time in six months and the rate of new orders was also falling rapidly. In addition, manufacturers started to cut jobs in the sector at the fastest rate since 2009.
HSBC chief China economist Qu Hongbin said the result reflects a general slowing in the Chinese economy.
"A soft start to the manufacturing sector in 2014, is partly due to weaker new export orders and slower domestic business activities during January," Qu said.
"Policy makers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed."
HSBC’s PMI survey is based on responses from over 420 manufacturers. There is a weighting towards smaller companies.