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January PMI shows China's economy stabilizing
By Wang Yanlin |
February 1, 2012, Wednesday
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Online Edition
Online Edition
MANUFACTURING activities in China's state-owned enterprises continued to expand in January while the private sector reported shrinking activities, according to two separate surveys released today.
Their results, however, pointed to a stabilizing trend in the world's second-largest economy which remained a star performer last month amid slow economic growth worldwide, analysts said.
The official Purchasing Managers' Index, a comprehensive gauge of manufacturing activities weighted more towards large state-owned enterprises, sat at 50.5 in January, up 0.2 point from a month earlier, the China Federation of Logistics and Purchasing said.
In comparison, the HSBC China Manufacturing Purchasing Managers' Index, which is slanted more towards private and export-oriented companies, remained below 50 in January at 48.8, although it edged up a bit from December's 48.7.
In both surveys, a reading above 50 indicates expansion; below 50 means contraction.
"The rebound for a second month in the official PMI shows China's economy is stabilizing," said Zhang Liqun, an analyst appointed by the federation. "The improvement in new orders reflects a recovery in manufacturing thanks to healthy domestic demand."
Component indices showed that new orders rose 0.6 point from December to 50.4, while production gained 0.2 point to 53.6. Trading was weak as new export orders fell 1.7 points to 46.9 and imports shrank 2.2 points to 46.9 as well.
Chang Jian, an economist at Barclays Capital, said the official PMI increase should be treated with more optimism because it defied the seasonal decline in the month of the Chinese New Year.
"In our view, the upside surprise also suggests the stronger-than-expected momentum in December's data is not temporary or driven solely by seasonal factors," Chang said. "It reflects the effect of earlier selective monetary easing and proactive fiscal policy, and hence can be sustained."
For private and export-oriented manufacturers which still reported activities contraction, Qu Hongbin, chief economist for China at HSBC, said it called for more aggressive easing measures to support their growth.
"Given the inflation is no longer a concern, China should launch more supportive policies for smaller manufacturers," Qu said. He added that once filtering through, the policy easing should ensure a soft-landing this year in China's economy.
"But first quarter is likely to be tough, with gross domestic product to be around 8 percent," Qu said.
China's economic growth stood at an annualized 9.2 percent last year, compared with 10.4 percent in 2010. But the pace moderated to 8.9 percent in the final quarter of last year, the slowest in two and a half years.
Their results, however, pointed to a stabilizing trend in the world's second-largest economy which remained a star performer last month amid slow economic growth worldwide, analysts said.
The official Purchasing Managers' Index, a comprehensive gauge of manufacturing activities weighted more towards large state-owned enterprises, sat at 50.5 in January, up 0.2 point from a month earlier, the China Federation of Logistics and Purchasing said.
In comparison, the HSBC China Manufacturing Purchasing Managers' Index, which is slanted more towards private and export-oriented companies, remained below 50 in January at 48.8, although it edged up a bit from December's 48.7.
In both surveys, a reading above 50 indicates expansion; below 50 means contraction.
"The rebound for a second month in the official PMI shows China's economy is stabilizing," said Zhang Liqun, an analyst appointed by the federation. "The improvement in new orders reflects a recovery in manufacturing thanks to healthy domestic demand."
Component indices showed that new orders rose 0.6 point from December to 50.4, while production gained 0.2 point to 53.6. Trading was weak as new export orders fell 1.7 points to 46.9 and imports shrank 2.2 points to 46.9 as well.
Chang Jian, an economist at Barclays Capital, said the official PMI increase should be treated with more optimism because it defied the seasonal decline in the month of the Chinese New Year.
"In our view, the upside surprise also suggests the stronger-than-expected momentum in December's data is not temporary or driven solely by seasonal factors," Chang said. "It reflects the effect of earlier selective monetary easing and proactive fiscal policy, and hence can be sustained."
For private and export-oriented manufacturers which still reported activities contraction, Qu Hongbin, chief economist for China at HSBC, said it called for more aggressive easing measures to support their growth.
"Given the inflation is no longer a concern, China should launch more supportive policies for smaller manufacturers," Qu said. He added that once filtering through, the policy easing should ensure a soft-landing this year in China's economy.
"But first quarter is likely to be tough, with gross domestic product to be around 8 percent," Qu said.
China's economic growth stood at an annualized 9.2 percent last year, compared with 10.4 percent in 2010. But the pace moderated to 8.9 percent in the final quarter of last year, the slowest in two and a half years.
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