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Climb in PMI shows supportive steps drive rally in manufacturing
Print Edition
China’s manufacturing activity in private and export-oriented companies rebounded in August from a three-month decline as they tapped the government’s supportive measures, an HSBC survey showed yesterday.
The HSBC Purchasing Managers’ Index, a comprehensive gauge of operating conditions at private and export-oriented manufacturers, rose to 50.1 last month from an 11-month low of 47.7 in July.
A reading above 50 means expansion, and it was the first time the index has grown positively since April.
Qu Hongbin, chief economist for China at HSBC, said the final reading reflected stable growth in China’s manufacturing sector as firms rode a modest rebound in new orders and output.
“This was mainly driven by the initial filtering through of recent stimulus measures and companies’ restocking activities,” Qu said. “We expect some upside surprise to China’s growth in the coming months.”
Supportive measures include tax cut for small companies, more investment in railway and other infrastructure construction as well as less red tape for exporters.
The components in the HSBC’s PMI revealed that manufacturing grew for the first time in three months in August amid signs of improved market conditions. Total new orders rose for the first time since April.
Meanwhile, the official Purchasing Managers’ Index, which is weighted toward large state-owned manufacturers, rose to a 16-month high of 51 last month, the China Federation of Logistics and Purchasing said on Sunday.
Yao Wei, an economist at Societe Generale, said China’s PMI readings “painted a picture of a domestic demand-led recovery.” He believed “data in the next two months will probably continue on a positive trend.”
Official data covering trade, industrial production, fixed-asset investment, retail sales and foreign direct investment in July all turned out to be better than expected.
Last week, Sheng Laiyun, a spokesman for the National Bureau of Statistics, said China will meet its economic growth target of 7.5 percent this year.
On Sunday, JPMorgan predicted China’s economy to grow 7.6 percent this year, up from its previous forecast of 7.4 percent.
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