Chinese Manufacturing Shrinks After Exports Collapse (Update2)

China¡¯s manufacturing contracted for a sixth month in January as the global recession sent growth sliding in Asia¡¯s export-driven economies.

The CLSA China Purchasing Managers¡¯ Index rose to a seasonally adjusted 42.2 from 41.2 in December, CLSA Asia- Pacific Markets said today in an e-mailed statement. A reading below 50 reflects a contraction.

Japan¡¯s factory production slumped by a record in December and South Korea today reported an unprecedented drop in exports in January. Premier Wen Jiabao has pledged to add to a 4 trillion yuan ($585 billion) economic stimulus package after China¡¯s growth slowed in the fourth quarter to the weakest pace in seven years.

¡°The fact that the PMI has bottomed is encouraging but should not be taken as evidence of recovery,¡± said Eric Fishwick, head of economic research at CLSA in Hong Kong. ¡°The rate of contraction remained considerable, reflecting rapidly deteriorating market conditions and fears of a deepening economic downturn.¡±

Chinese manufacturers shed jobs last month at the fastest pace since the survey began in 2004, CLSA said. The survey¡¯s employment index fell to a record low of 45.

About 20 million migrant workers have lost their jobs because of the nation¡¯s economic slowdown, Chen Xiwen, a senior rural planning official said at a briefing in Beijing today.

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