The preliminary February reading of 48.3 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with January’s final figure of 49.5 and the 49.5 medianestimate in a Bloomberg News survey of 17 economists. A number below 50 indicates contraction.
Softening factory output may encourage policy makers to take steps to support economic expansion that’s projected by analysts to slide to a 24-year low in 2014. The government this week set a 9.5 percent target for industrial-production growth this year, down from 10 percent in 2013.
“Beijing policy makers should and can fine-tune policy to keep growth at a steady pace in the coming year,” Qu Hongbin, HSBC’s chief China economist in Hong Kong, said in a statement.
China data in January and February are distorted by the shifting timing of the weeklong Lunar New Year holiday, which began this year on Jan. 31 and last year on Feb. 9.
President Xi Jinping and Premier Li Keqiang are trying to maintain growth above 7 percent while reducing overcapacity and pollution and preventing a surge in debt from spiraling into a financial crisis. The government normally provides the current year’s expansion target at the annual meeting of the National People’s Congress, which starts March 5.