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HSBC PMI figure rises, but still indicates contraction
By Wang Yanlin |
April 23, 2012, Monday
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Online Edition
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CHINA'S manufacturing activities among private companies still show a contraction even though it will likely rebound a bit in April, a preliminary reading by the HSBC Purchasing Managers' Index indicated this morning.
But economists still suggested more easing measures are needed to support a slowing economy.
This month's HSBC Flash PMI, the earliest available indicator of China's industrial sector and which is slanted more towards private and export-oriented firms, stood at 49.1 - a two-month high but still less than 50. A reading under 50 means contraction in manufacturing activities.
The rate was higher than the final reading of 48.3 in March. The bank may release April's final reading later this week.
"As the April flash PMI ticked higher, it suggests the earlier easing measures have started to work and hence should allay concerns of a sharp growth slowdown," said Qu Hongbin, chief economist for China at HSBC.
"However, the pace of both output and demand growth remains at a low level in a historical context and the job market is under pressure. This calls for additional easing measures in coming months," Qu said.
He expected monetary and fiscal easing to speed up in the second quarter. Some analysts called specifically for another reserve requirement ratio cut this month.
China's gross domestic product expanded 8.1 percent from a year earlier in the first three months, the slowest in nearly three years after both exports and fixed-asset investment growth weakened in recent months.
Industrial production rose 11.6 percent in the first quarter, up from 11.4 percent in January and February.
Large state-owned manufacturers seemed to outperform private companies.
The official Purchasing Managers' Index, compiled by the China Federation of Logistics and Purchasing and which is weighted toward state-owned enterprises, reached a one-year high of 53.1 in March. The federation will release its April figure on May 1.
But economists still suggested more easing measures are needed to support a slowing economy.
This month's HSBC Flash PMI, the earliest available indicator of China's industrial sector and which is slanted more towards private and export-oriented firms, stood at 49.1 - a two-month high but still less than 50. A reading under 50 means contraction in manufacturing activities.
The rate was higher than the final reading of 48.3 in March. The bank may release April's final reading later this week.
"As the April flash PMI ticked higher, it suggests the earlier easing measures have started to work and hence should allay concerns of a sharp growth slowdown," said Qu Hongbin, chief economist for China at HSBC.
"However, the pace of both output and demand growth remains at a low level in a historical context and the job market is under pressure. This calls for additional easing measures in coming months," Qu said.
He expected monetary and fiscal easing to speed up in the second quarter. Some analysts called specifically for another reserve requirement ratio cut this month.
China's gross domestic product expanded 8.1 percent from a year earlier in the first three months, the slowest in nearly three years after both exports and fixed-asset investment growth weakened in recent months.
Industrial production rose 11.6 percent in the first quarter, up from 11.4 percent in January and February.
Large state-owned manufacturers seemed to outperform private companies.
The official Purchasing Managers' Index, compiled by the China Federation of Logistics and Purchasing and which is weighted toward state-owned enterprises, reached a one-year high of 53.1 in March. The federation will release its April figure on May 1.
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