China manufacturing contracts for first time in six months

January saw Chinese manufacturing contract for the first time in six months, HSBC confirmed, raising concerns over growth prospects for the second-largest economy in the world.

The British banking giant's final reading of China's purchasing managers' index (PMI), tracking manufacturing activity in factories and workshops, was down to 49.5 this month, its lowest figure since July and fractionally below the preliminary 49.6 reading HSBC announced last week, the report said.

The closely-followed gauge of the health of the Asian economic powerhouse indicated growth above the 50 level, while sub-50 levels signal contraction.

According to HSBC, the deterioration of the headline PMI largely reflected weaker expansions of both output and new business over the month. The lender added, firms also cut their staffing levels at the quickest pace since March 2009.

The figure of 47.7 for July was the last time it dropped below the critical point.

The country's week-long Lunar New Year holiday, which got under way Friday and during which the country's shops, offices and factories largely shut down, could have an impact on the figures, according to analysts.

They added they were cautious about reading too much into the figures at this time of year, as year-to-year shifts in the timing of Chinese New Year made seasonal adjustment less accurate.

Meanwhile, China's economic growth for 2013 was measured at 7.7 per cent, maintaining its slowest expansion in over a decade.

The Markit / HSBC final manufacturing PMI for January was down to 49.5 from December's 50.5, in the first deterioration in six months, Reuters  reported. The figure aligned with the 49.6 reported in the preliminary version of the PMI released a week earlier, the report said.

The survey found a weakening in growth rates in output and new business even as companies cut jobs at the fastest rate since March 2009.

"A soft start to China's manufacturing sectors in 2014, partly due to weaker new export orders and slower domestic business activities during January," said Hongbin Qu, chief economist for China at HSBC, in a statement.

"Policymakers should pay attention to downside risks and pre-emptively fine-tune policy to steady the pace of growth if needed."

According to many economists and  commentators, Beijing would act if the economy lost traction too quickly even as it pushed towards more balanced and sustained economic growth.