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China’s manufacturing index slips to five-month low in Jan Most Japanese firms set for sales profit growth: survey

BEIJING, Feb 1, (AFP): China’s official gauge of its manufacturing sector slipped to a five-month low in January, the government announced Saturday, confirming a slowdown in factory activity in the world’s second largest economy. The monthly purchasing managers’ index (PMI) declined to 50.5 in January after recording 51 in December and 51.4 in November, according to the government’s National Bureau of Statistics and the China Federation of Logistics and Purchasing. Any figure above the 50 mark indicates expansion of manufacturing activity while anything below that signals contraction. All major components of the PMI index, from new orders to production, declined, indicating downward pressure on the economy, state news agency Xinhua reported. The decline “could be largely due to the (Spring) festival effect,” ANZ bank said in a note, referring to the annual Chinese lunar new year holiday when millions of migrant workers down tools and return to their homes.

The Year of the Horse began on Friday but the widespread closure of factories and workshops started several days earlier. HSBC bank announced on Thursday that China’s manufacturing sector shrank in January for the first time in six months, with the PMI index recording 49.5, placing it in contraction territory.
Qu Hongbin, HSBC bank’s economist in Hong Kong, described it as “a soft start to China’s manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January”. China recorded annual GDP growth of 7.7 percent in 2013, the government said in mid-January, indicating it maintained its slowest expansion in more than a decade.

Also:
TOKYO:
Nearly 70 percent of listed Japanese companies are likely to post sales and profit growth this business year, a sign they are gaining traction after years of deflation, a report said Saturday. More than 1,000 companies out of about 1,500 firms listed on stock markets are on track to log annual rises in both sales and recurring profits for the business year ending in March, the Nikkei business daily said. The 1,500 companies are expected to post a combined 10 percent rise in sales and a 28 percent increase in recurring profit, the daily said, citing its tally of the companies’ forecasts. The robust earnings are thanks to stronger exports business benefiting from a weaker yen, while domestic consumer spending is also picking up, it said. Companies are making a steady shift to making profits out of higher sales from the past practice of eking out gains by restructuring businesses, it said.

The tally excluded firms in the financial sector and the report did not mention net profit. The Nikkei said manufacturers were driving the overall improvement in corporate earnings, with sales expected to jump 16 percent for steelmakers, 14 percent for automakers, and 13 percent for machinery makers. Companies driven by domestic demand are benefiting from a resurgence in consumer spending, it said, pointing to soaring higher sales of jewellery and expensive watches. Japanese stock prices have jumped and the yen plunged since late 2012 owing to a policy blitz dubbed Abenomics, which meshes government spending with massive central bank monetary easing aimed at stemming 15 years of deflation. A weak yen is positive for Japanese exporters but inflates the cost of imports. Japan’s two biggest airlines said Friday that the weak yen sent fuel costs soaring and profits into a nosedive in the nine months to December.

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