China Factory Gauge Highlights Weakness That Spurred Rate Cut

(Bloomberg) — A Chinese factory gauge signaled contraction again in February, a day after the central bank’s decision to step up support for the economy with its second cut to benchmark interest rates in three months. The government’s manufacturing Purchasing Managers’ Index was 49.9 last month from 49.8 in January, according to the statistics bureau and the China Federation of Logistics and Purchasing in Beijing. Numbers below 50 signal contraction. An interest-rate reduction announced late Saturday comes days before an annual gathering of China’s lawmakers, who will approve the budget and announce a 2015 growth goal that most economists expect will be lowered to about 7 percent. The move to join global counterparts with more easing reflects deepening concern over an economy squeezed by a property slump, tighter controls over local government debt and capital outflows. “With the property markets deflating and the economy in desperate need of interest-rate relief because of the high stock of debt, the PBOC has been forced to take the recent actions,” said Stephen Jen, co-founder of SLJ Macro Partners LLP in London and a former International Monetary Fund economist. “China continues to decelerate.” Non-manufacturing PMI, a gauge for services and construction, rose to 53.9 in February from January’s

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