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Flash PMI showing slight signs of recovery
By Wang Yanlin |
September 21, 2012, Friday
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Print Edition
Print Edition
CHINA'S manufacturing is still in contraction in September but the slowdown might be stabilizing, according to a survey released yesterday.
HSBC Corp said a preliminary reading of its purchasing managers' index stood at 47.8 on a 100-point scale where a number below 50 indicates contraction. That was up slightly from August's 47.6.
The HSBC Flash PMI, an indicator of China's industrial activity slanted toward private and export-oriented firms, is based on about 420 companies.
Qu Hongbin, chief economist for China at HSBC, said that although China's manufacturing growth was still slowing, the pace of the slowdown was stabilizing.
"Manufacturing activities remain lackluster due to weak new business flows and a longer-than- expected destocking process," Qu said.
"This is adding more pressure to the labor market and has prompted China to step up easing over the past weeks. The recent easing measures should be working to lead to a modest improvement from the fourth quarter onward," Qu added.
Barclays economist Chang Jian said industrial activity remained weak and the direction of the economy in the second half would be stabilization rather than reacceleration.
"The Flash PMI suggests that while near-term industrial activity is slowing further on continued destocking, the slowdown in demand appears to be stabilizing on the back of various, albeit modest, supportive domestic measures," Chang said.
The component indices showed that output contracted at a faster rate, while new orders, new export orders and employment all improved.
Barclays projected China's economic growth in the third quarter may slow further to 7.3 percent from the increase of 7.6 percent in the second quarter, which was the slowest pace in three years.
The slowdown has prompted the government to quicken approvals for large investment projects, and to increase liquidity in the banking system through repurchase agreements in the past few months.
Gao Ting, managing director and chief China strategist at UBS, said that China would witness a mild recovery in this year's fourth quarter based on recoveries in investment and stable industrial production.
"China may keep an expansionary policy stance to maintain the growth momentum, but it is impossible to return to a time of double-digit growth," Gao said.
He expected China's gross domestic product would sit at 7.5 percent this year and 7.8 percent in 2013, and maintain a growth rate of around 7 percent in the next three to five years.
"Policy changes now depend on the moves of inflation rates, which have shown signs of a rebound and may be fanned by the third round of quantitative easing in the US," Gao said.
China's Consumer Price Index, the main gauge of inflation, rose 2 percent last month compared to a year earlier.
HSBC Corp said a preliminary reading of its purchasing managers' index stood at 47.8 on a 100-point scale where a number below 50 indicates contraction. That was up slightly from August's 47.6.
The HSBC Flash PMI, an indicator of China's industrial activity slanted toward private and export-oriented firms, is based on about 420 companies.
Qu Hongbin, chief economist for China at HSBC, said that although China's manufacturing growth was still slowing, the pace of the slowdown was stabilizing.
"Manufacturing activities remain lackluster due to weak new business flows and a longer-than- expected destocking process," Qu said.
"This is adding more pressure to the labor market and has prompted China to step up easing over the past weeks. The recent easing measures should be working to lead to a modest improvement from the fourth quarter onward," Qu added.
Barclays economist Chang Jian said industrial activity remained weak and the direction of the economy in the second half would be stabilization rather than reacceleration.
"The Flash PMI suggests that while near-term industrial activity is slowing further on continued destocking, the slowdown in demand appears to be stabilizing on the back of various, albeit modest, supportive domestic measures," Chang said.
The component indices showed that output contracted at a faster rate, while new orders, new export orders and employment all improved.
Barclays projected China's economic growth in the third quarter may slow further to 7.3 percent from the increase of 7.6 percent in the second quarter, which was the slowest pace in three years.
The slowdown has prompted the government to quicken approvals for large investment projects, and to increase liquidity in the banking system through repurchase agreements in the past few months.
Gao Ting, managing director and chief China strategist at UBS, said that China would witness a mild recovery in this year's fourth quarter based on recoveries in investment and stable industrial production.
"China may keep an expansionary policy stance to maintain the growth momentum, but it is impossible to return to a time of double-digit growth," Gao said.
He expected China's gross domestic product would sit at 7.5 percent this year and 7.8 percent in 2013, and maintain a growth rate of around 7 percent in the next three to five years.
"Policy changes now depend on the moves of inflation rates, which have shown signs of a rebound and may be fanned by the third round of quantitative easing in the US," Gao said.
China's Consumer Price Index, the main gauge of inflation, rose 2 percent last month compared to a year earlier.
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