China flash HSBC PMI falls to 49.6 in January, first contraction in 6 months

China's manufacturing activity contracted for the first time in six months in January, a private survey by HSBC showed on Thursday.
The flash HSBC Purchasing Managers' Index fell to 49.6 in the month, compared with a final reading of 50.5 in December.
Analysts tell CNBC the data, while possibly skewed, raised potential concerns for the world's second biggest economy.
"There are probably some New Year distortions in here as it is right between the holidays, but it does suggest not all is well in China's economy. I wouldn't get my hopes up for a big, strong pick-up right after Chinese New Year," said Frederic Neumann, MD & Co-Head of Asian Economics Research at HSBC.
"Interest rates are rising in China, we know the government is pursuing aggressive reforms; a strong pick-up is not in the cards for China," he added.
The reaction in the markets was swift: the Australian dollar dipped 0.5 percent against the greenback, while the Shanghai Composite widened its losses.

HSBC's Neumann noted with concern that despite improving U.S. and European growth, exports in China just aren't responding like they have in the past.
"We have again, a contraction in new export orders. The trade flow just isn't ramping up as we're used to and that reflects in part a decline of competitiveness of China's economy and that trade is no longer a big driver for the Chinese manufacturing sector. It is increasingly domestic demand and that engine isn't firing either so China is really challenged on both fronts, he said."