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China's June PMI at six-month high

Source: Xinhua | July 1, 2014, Tuesday | Online Edition

Growth in China's manufacturing sector accelerated to a six-month high in June, registering a strong end to the second quarter and an encouraging sign that the economy is further stabilizing.

The purchasing managers' index (PMI) rose to 51 last month, up from 50.8 in May and the highest since December, according to data released on Tuesday by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

This is also the fourth monthly rise of the PMI, a widely watched indicator for the health of the world's second largest economy, which registered a weak start at the beginning of the year and stirred much market concern.

China's economic growth slipped to 7.4 percent in the January-March period, the lowest quarterly expansion since the third quarter of 2012, but recovery in key indicators in the last three months has provided evidence that the economy may have turned the corner.

Apart from the headline PMI, latest data showed industrial businesses saw their profits rise by 9.8 percent from a year ago in the first five months of 2014. China's exports also picked up in May by a 7-percent year-on-year increase, reversing weak performances in previous months.

"The continuous rises in PMI indicate that a trend of stable economic growth has generally been established," said Zhang Liqun, a researcher at the Development Research Center of the State Council. "The policy measures aimed to stabilize growth have taken effect," he added.

Among major sub-indices in the PMI, the one for new orders, seen by analysts as the most important of all, jumped by 0.5 of a point from a month ago to 52.8 in June, the highest since October 2013.

Specifically, the sub-index for new export orders climbed from below the boom-bust line of 50 to 50.3, thanks to improved external demand and government reform measures to support growth and facilitate trade, according to NBS analyst Zhao Qinghe in a research note.

The sub-index for production, seen as a foundation for steady PMI growth, edged up 0.2 of a point to 53 in June, marking a second consecutive monthly increase.

However, Zhao pointed out that "the forces to shore up the PMI are not balanced", citing lackluster sub-indices for imports and employment.

The imports sub-index for June increased slightly by 0.2 of a point to 49.2, a seventh straight month below 50 and pointing to weak demand of the surveyed enterprises to import raw materials from abroad.

After a small decline in May, the employment sub-index of the PMI rebounded by 0.4 of a point to 48.6 in June, reflecting prolonged contraction in the job market.

The sub-index for business outlook fell by 1.4 from a month earlier to 54.8, but 0.7 of a point higher from the same period last year.

 

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