Chinese manufacturing enters 2012 on sluggish note

Chinese manufacturing experienced sluggish start to the year, as factory activity measured in rival surveys, hovered near levels that indicated activity was neither expanding nor contracting. Analysts said the results suggested a cooling of economic growth.

China's official Purchasing Managers' Index (PMI) stood at 50.5 in January, which was higher than analysts' projections of 49.5 in a poll by Dow Jones Newswires, rising from 50.3 in December, according to data released today.

Meanwhile a private-sector version of the survey released by HSBC later in the morning today showed the index at 48.8, unchanged from a preliminary reading released last month and which was somewhat ahead of HSBC's December China PMI measure at 48.7.

According to Societe Generale, the Chinese economy was slowing amid an extended period of weakness, marked by overall soft growth and input prices that would prove ''sticky'' on the high side.

According to SocGen's economist Wei Yao, who wrote a note following the data, this presented a dilemma for the People's Bank of China. She added that any cuts to banks' required reserve ratio were now likely off the table until March.

She said, policy makers would not get much help from the statistics bureau this month, adding that the department decided to not release figures on investment and other activity in January owing to distortions related to the national week-long holiday that month.