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Asian manufacturing growth mostly weak in February

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(Globalpost/GlobalPost)

Asian manufacturing growth was mostly weak in February, surveys showed Friday, suggesting tepid recovery in the region's export-dependent economies.

Manufacturing activity in Chinese factories expanded at its slowest rate in five months in February, the surveys showed. Activity in Australia and Vietnam contracted while Taiwan slowed, but India and Indonesia bucked the negative trend.

China's official purchasing managers' index (PMI) was 50.1 in February, the lowest since September when it stood at 49.8, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP).

The figure was seasonally adjusted, they said, to mitigate volatility led by the week-long Chinese New Year holiday that fell in the middle of the month.

A reading above 50 indicates the sector is expanding while anything below points to contraction.

British bank HSBC said its final PMI for February was 50.4, unchanged from its preliminary reading and remaining at a four-month low.

Still, it marked the fourth straight month of expansion after a year of contraction, according to the bank's figures.

"China's recovery continues on improving domestic demand conditions and the labour market," said Qu Hongbin, a Hong Kong-based economist with HSBC, in a statement.

"The pace of ongoing recovery is mild, implying no need for the People's Bank of China to tighten policy any time soon."

The latest official figures show Chinese banks more than doubled their lending in January from December, granting 1.07 trillion yuan ($171.7 billion) worth of new loans, as Beijing seeks to boost growth.

PMI is a widely watched barometer of the health of China's economy. The country's manufacturers employ millions of workers and are a key driver of the world's second-largest economy.

China's economy expanded 7.8 percent last year, its slowest pace in 13 years, in the face of weakness at home and in key overseas markets, though it picked up in the final three months of the year.

Asian markets were mostly lower Friday after the batch of PMI figures.

Australia's benchmark index slid 0.35 percent. Hong Kong fell 0.61 percent and Shanghai was 0.26 percent lower. Taiwan stocks, however, rose 0.84 percent.

HSBC said manufacturing activity in Vietnam contracted to 48.3 last month from 50.1 in January while Taiwan eased to 50.2 in February from 51.5 in the previous month.

Despite the weak performance in those two economies, also partly due to less working days during the Lunar New Year holiday, recovering demand indicated the worst might be over, the bank said.

Manufacturing activity in India jumped to 54.2 in February from 53.2 in January on the back of stronger domestic and external demand, HSBC said.

"Manufacturing activity picked up on the back of stronger growth in domestic orders," said HSBC chief economist Leif Eskesen. "The pace of growth was solid."

In Indonesia, the index rose to 50.5 last month from 49.7 in the previous month, the bank said.

The Australian Industry Group's performance of manufacturing index continued to contract but at a slower pace, rising to 45.6 last month from 40.2 in January, according to Dow Jones Newswires.

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