The flash PMI for China’s manufacturing sector showed output in decline for the first time in six months.
Reuters and others report that the factories for Australia’s biggest export market recorded a result of 49.6 in the Markit/HSBC flash PMI, down from December’s 50.5.
Any result in the survey-based flash PMI below 50 indicates contraction.
The Australian dollar dropped about half a cent within minutes of yesterday’s announcement to trade at US$0.8792.
''The marginal contraction of January's headline HSBC flash China manufacturing PMI was mainly dragged by cooling domestic demand conditions,'' Fairfax reports HSBC’s Qu Hongbin as saying.
''This implies softening growth momentum for manufacturing sectors, which has already weighed on employment growth. As inflation is not a concern, the policy focus should tilt towards supporting growth to avoid repeating growth deceleration seen in the first half of 2013.''
The official PMI will be released in two weeks.
Image: News Corp