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Flash PMI finds factories at their busiest for 6 months
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China’s manufacturing activity in September expanded the most in six months, indicating continuing improvement in the country’s economy, a survey showed yesterday.
The HSBC Flash China Manufacturing Purchasing Managers Index, the earliest available indicator of operating conditions at private and export-oriented industrial companies, settled at 51.2 this month, up from August’s final reading of 50.1 and July’s 47.7, which was the lowest in 11 months. A reading above 50 means expansion.
The flash estimate is based on approximately 85 to 90 percent of total PMI survey responses each month. Final September figures are to be published on September 30.
The HSBC report showed growth in output, new orders, export orders and prices was faster in September, while employment fell at a slower rate.
Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC, said the data confirmed a rebound in China’s growth supported by improvements in external and domestic demand.
“We expect a more sustained recovery as the further filtering through of fine-tuning measures should lift domestic demand,” Qu said. “This will create more favorable conditions to push forward reforms, which should in turn boost mid and long-term growth outlooks.”
Zhu Haibin, JPMorgan China’s chief economist, said the PMI was higher than expected, but China may still risk slower growth next year under economic reforms and relatively tight monetary policies.
“The economy is still facing the structural problems of overcapacity in some key industries and the mounting financial risks,” Zhu said. “Moreover, while the recovery in advanced economy is good news for China’s external demand, the big uncertainty related to emerging markets and the fast appreciation in yuan’s real effective exchange rates will be the offsetting factors.”
The National Bureau of Statistics releases the official manufacturing PMI, sampling mainly state-owned companies, on October 1. The official gauge rose to 51 in August, the highest since April 2012.
So far this year, policy-makers have unveiled a raft of measures to bolster the economy, including providing financial aid for exporters, encouraging spending in infrastructure and railway construction, and cutting taxes for small businesses.
Major international financial institutions, including Deutsche Bank, Citigroup, and Merrill Lynch, have raised hopes for China’s economic growth this month after data for August showed upbeat results from factory output and exports to retail sales.
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