Chinese manufacturing growth slows in January

SHANGHAI: Manufacturing growth in China slowed in January, official figures released Tuesday showed, but rising input costs signalled Beijing has not yet tamed inflation.

The country's Purchasing Managers Index fell to 52.9 in January from 53.9 in December, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement.

A figure above 50 indicates expansion in China's vast manufacturing sector while a figure below 50 represents contraction.

However, an independent seasonally adjusted PMI reading released by HSBC bank indicated manufacturing activity stayed relatively stable in January at 54.5, up slightly from 54.4 in December.

Economists said the figures would likely prompt Chinese policymakers to continue focusing on fighting consumer inflation, which eased in December from the previous month but remained stubbornly high at 4.6 percent.

The official PMI's input price sub-index rose to 69.3 from 66.7, pointing to growing upward pressure on costs that were already at high levels, said Brian Jackson, a senior strategist at Royal Bank of Canada.

"This provides a further reason to think that headline inflation is likely to pick up in the next few months, and will strengthen the case for further policy moves over 2011, including rate hikes and a faster pace of currency appreciation," Jackson said.

China has raised the reserve requirement ratio -- the amount of money lenders must keep in reserve -- seven times in 2010, and raised benchmark lending and deposit rates twice in the fourth quarter.

Officials and economists have warned China's inflation risks will remain high in the first quarter of 2011 despite the December slowdown.