Flash PMI up to 4-month high
Print Edition
China’s manufacturing activity expanded for the first time in four months, after the central government’s stabilizing measures began to take effect, 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 50.1 this month, up from July’s final reading of 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 August figures are to be published on September 2.
The new order component rose by 3.9 points to 50.5, the highest reading since April.
Export orders fell modestly in July by 1.2 points to reach 46.5, still registering the second lowest level since October last year.
Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC, said new business and output are driving manufacturing recovery, and may continue to pick up in the coming months.
“This is mainly driven by the initial filtering-through of recent fine-tuning measures and companies’ restocking activities, despite the continuous external weakness,” Qu said. “We expect further filtering-through, which is likely to deliver some upside surprises to China’s growth in the coming months.”
Zhu Haibin, JP Morgan China’s chief economist, said the PMI confirmed a recovery trend first indicated by July’s macro data, and added that policy-makers will not carry out vast stimulus plans that may pare economic reform efforts.
“While we do not expect any major significant stimulus measures, the government appears keen to selectively support infrastructure investment, including railways, urban basic facilities, and environmental and energy conservation industries, hinting at solid public sector fixed assets investment growth in coming months,” Zhu added.
China’s official PMI index, leaning toward state-owned companies, is due on September 1.
So far this year, policy-makers have unveiled a raft of bespoke measures to bolster the economy, including providing financial aid for struggling exporters, encouraging spending in infrastructure and railway construction, and axing taxes for small businesses.
Data for July showed upbeat results from factory output and exports to retail sales, raising hopes that China’s economy may be stabilizing.
Exports beat forecasts, rising 5.1 percent year on year in July after a 3.1 percent fall in June. Imports were also strong, up 10.9 percent compared with a fall of 0.7 percent in June.
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