Factories show sign of recovery
By Wang Yanlin |
October 2, 2012, Tuesday
|
Print Edition
Print Edition
China's manufacturing activity improved for the first time since May in September but they are still in contraction, a survey showed yesterday.
The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in mostly state-owned manufacturers, rose to 49.8 in September, up 0.6 points from a month earlier, the China Federation of Logistics and Purchasing said.
It was the second month the index had fallen below the 50 mark which separates an expansion from a contraction.
"The official PMI came in below 50 again, indicating a continued weakness in the economy," said Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd.
"It confirms our view that the policies implemented so far have failed to arrest a cyclical economic downturn."
Zhou said he expected the People's Bank of China to cut the reserve requirement ratio soon to enrich liquidity in the banking system.
With the possibility of growth in the third quarter being lower than expected, Zhou added, a cut in interest rates before the end of the year was also likely.
China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, the slowest in three years. Some analysts projected that third-quarter growth will slip further to 7.3 percent.
Li Maoyu, an economist at Changjiang Securities Co, said last month's PMI improvement showed that economic stabilization might be on the way, but more policy measures were needed to secure it.
Component indices showed production increased to 51.3 in September from 50.9 a month earlier, new orders rose by 1.1 points to 49.8, and new export orders gained 2.2 points to 48.8.
Meanwhile, the HSBC Purchasing Managers' Index, slanted more toward private and export-oriented companies, also reported a rate suggesting easing deterioration.
The HSBC PMI posted 47.9 in September, up from 47.6 in August thanks to stabilizing production, the bank said.
But, in a marked contrast to the official data, new export orders under the HSBC PMI declined at their sharpest rate in 42 months amid reports of weak international demand.
The difference between the official PMI and its counterpart compiled by HSBC is caused by different samples in different segments of the industry.
Qu Hongbin, chief economist for China at HSBC, said Chinese manufacturing growth was likely to bottom out.
"However, the sharper contraction of new export orders and the lingering pressures on job markets mean that China should step up easing to support growth and employment," Qu said.
Qu suggested fiscal measures should play a more important role in the coming months.
The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in mostly state-owned manufacturers, rose to 49.8 in September, up 0.6 points from a month earlier, the China Federation of Logistics and Purchasing said.
It was the second month the index had fallen below the 50 mark which separates an expansion from a contraction.
"The official PMI came in below 50 again, indicating a continued weakness in the economy," said Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd.
"It confirms our view that the policies implemented so far have failed to arrest a cyclical economic downturn."
Zhou said he expected the People's Bank of China to cut the reserve requirement ratio soon to enrich liquidity in the banking system.
With the possibility of growth in the third quarter being lower than expected, Zhou added, a cut in interest rates before the end of the year was also likely.
China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, the slowest in three years. Some analysts projected that third-quarter growth will slip further to 7.3 percent.
Li Maoyu, an economist at Changjiang Securities Co, said last month's PMI improvement showed that economic stabilization might be on the way, but more policy measures were needed to secure it.
Component indices showed production increased to 51.3 in September from 50.9 a month earlier, new orders rose by 1.1 points to 49.8, and new export orders gained 2.2 points to 48.8.
Meanwhile, the HSBC Purchasing Managers' Index, slanted more toward private and export-oriented companies, also reported a rate suggesting easing deterioration.
The HSBC PMI posted 47.9 in September, up from 47.6 in August thanks to stabilizing production, the bank said.
But, in a marked contrast to the official data, new export orders under the HSBC PMI declined at their sharpest rate in 42 months amid reports of weak international demand.
The difference between the official PMI and its counterpart compiled by HSBC is caused by different samples in different segments of the industry.
Qu Hongbin, chief economist for China at HSBC, said Chinese manufacturing growth was likely to bottom out.
"However, the sharper contraction of new export orders and the lingering pressures on job markets mean that China should step up easing to support growth and employment," Qu said.
Qu suggested fiscal measures should play a more important role in the coming months.
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