* China official PMI eases to 50.4 for Jan, vs 50.6 in Dec
* Official PMI below Reuters poll forecast of 50.9
* HSBC final Jan PMI jumps to two-year high at 52.3
* Both surveys show firm domestic demand, weak foreign
BEIJING, Feb 1 China's giant manufacturing
sector extended its mild recovery in January with weak foreign
demand still crimping growth, a pair of surveys showed,
underscoring that the country's rebound from its worst downturn
in 13 years remains modest.
Two separate versions of the purchasing managers' index
(PMI) released on Friday showed factory output in the world's
second-largest economy rose in January, but at starkly different
speeds suggesting a patchy revival in activity.
An official PMI compiled by the government showed factory
sector growth was slower-than-expected in January, with the
index rising to 50.4, below market forecasts for a nine-month
high outcome of 50.9 and a touch below December's 50.6.
A private PMI survey released by HSBC, on the other hand,
showed growth among manufacturers quickening to a two-year high
of 52.3 in January, better than the flash, or preliminary,
reading of 51.9, as domestic demand aided business.
"January's PMI does raise some red flags about the state of
the economy," said Alistair Thornton, an economist at IHS Global
Insight in Beijing. "Things look a little shaky."
The official and HSBC PMI surveys on China often do not move
in tandem due to their different sampling methods. The official
PMI favours big state factories while the HSBC PMI favours
smaller private manufacturers.
Both surveys showed manufacturers were helped by firm
domestic demand, but buffeted by lacklustre foreign demand as
shoppers in the United States and Europe, the two biggest buyers
of Chinese exports respectively, cut back spending.
The National Bureau of Statistics said the official survey
showed that manufacturers focused on domestic consumption had
done particularly well in January, while those levered to the
electronics and shipping sectors had fared worst.
The results support expectations that the unfolding economic
recovery in China is powered from home by rising state
investment and resilient private consumption.
The Chinese economy posted its worst annual growth since
1999 last year at 7.8 percent. Analysts polled by Reuters last
month forecast things could pick up slightly this year and next
with the economy growing 8.1 percent.
The official PMI has been above the 50-point level
demarcating growth or contraction from the previous month since
August 2012, though its failure to break above 51 indicates that
the economic expansion it signals is only moderate.
The NBS said on Friday it had expanded the sample size for
the official PMI survey to 3,000 firms from the previous 820
across 31 industries from Jan. 1, without explaining the change.
It did not say if historical data would be revised with the
changes, and gave no assessment of how the change might affect
But signs that the economic recovery -- albeit gentle -- was
gaining strength were evident in both surveys on Friday.
The new orders sub-index in the official PMI inched up to a
nine-month high of 51.6, while that for the HSBC PMI climbed to
a two-year high of 53.7.
In contrast, the sub-index for export orders was more muted.
It stood at 48.5 for the official PMI and was just a shade above
50 in the HSBC survey.
"We see increasing signals of a sustained growth recovery in
coming months," said Qu Hongbin, chief China economist at HSBC.
"The steady investment growth led by infrastructure
projects, improving labour market conditions boosting consumer
spending, and the ongoing re-stocking process to lift production
growth," he said in a statement.
The quantity of purchases sub-index also hit a nine-month
peak in the official PMI, with its rise to 53.2 another
indication that the destocking process that had dragged on
China's industrial output through 2012 was over.
And in line with busier production, both surveys showed
price pressures were quickly building up.
The HSBC PMI showed the input prices sub-index jumping to
its highest since September 2011, while the official PMI showed
the input price sub-index zooming to a 17-month high of 57.2.
Although both PMI surveys are seasonally adjusted, some
analysts cautioned against reading too much into the data due to
distortions from the Lunar New Year holiday, which fell in
January last year and is in February this year.
"We believe the Chinese economy and its related asset
markets will remain in a sweet spot in the near-term," Ting Lu,
chief China economist with Bank of America/Merrill Lynch wrote
in a note to clients.