China's manufacturing slows at start of 2014

China celebrated the start of the Year of the Horse last week but its economy may have started to slow to a trot last month.

A report from Markit Economics last week had shown that the HSBC manufacturing purchasing managers index for China fell to 49.5 in January from 50.5 in December, indicating a contraction in the sector.

The official PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing released over the weekend was slightly less downbeat, falling to 50.5 last month from 51.0 in December.

A possible slowdown in China's economy has been cited by some economists as one of the reasons for the recent turmoil in emerging markets. If correct, the latest data on Chinese manufacturing activity does not bode well for emerging markets this week.

Meanwhile, data on the United States economy last week were mixed.

An advance estimate of real gross domestic product from the Commerce Department showed that the US economy grew at an annualised rate of 3.2 percent in the fourth quarter. While slower than the 4.1 percent growth rate in the third quarter, it was still better than the 1.8 percent average rate for the first half of the year.

Data on US consumer confidence last week were mixed. The Conference Board's consumer confidence index rose to 80.7 in January from 77.5 in December but the Thomson Reuters/University of Michigan consumer sentiment index fell to 81.2 from 82.5.

However, other reports last week showed that new home sales in the US fell 7.0 percent in December, pending home sales fell 8.7 percent and durable goods orders fell 4.3 percent.

Elsewhere, the European Commission reported last week that its economic sentiment indicator for the euro area rose to 100.9 in January, the highest reading since July 2011, from 100.4 in December.

In Japan, a report last week showed that the Markit/JMMA manufacturing PMI rose to 56.6 in January, the highest level since February 2006, from 55.2 in December.