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July flash PMI at 9-month high
By Wang Yanlin |
July 24, 2012, Tuesday
|
Online Edition
Online Edition
CHINA'S manufacturing activities may be improving at the fastest pace in nine months in July, a preliminary reading for the HSBC Purchasing Managers' Index showed this morning.
The HSBC Flash PMI for July, the earliest available indicator of China's industrial sector and which is slanted more towards private and export-oriented firms, rebounded to 49.5 from June's official reading of 48.2.
Although it remained under 50 which separates expansion from contraction, the data indicated a fast pace of recovery, said Qu Hongbin, chief economist for China at HSBC.
"July's flash PMI data picked up to a five-month high, suggesting the earlier easing measures are starting to work," Qu said.
However, given the still weak demand and employment implied by the below-50 data, Qu said more easing efforts are needed to support growth and jobs.
"We believe the fast falling inflation allows China to do so and a more meaningful improvement of growth is expected in the coming months when these measures fully filter through," Qu added.
China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, the slowest pace in three years.
Meanwhile, Consumer Price Index, the main gauge of inflation, rose 2.2 percent year on year in June, a 29-month low that allowed more room for policy easing.
Zhang Zhiwei, an economist at Nomura, said recent signs indicated a prolonged downturn which makes the government feel greater urgency to loosen policy, and that public investment will likely pick up in the coming months.
Earlier this month, China cut interest rates for the second time in one month to lower borrowing costs for business and investment.
Before that, China had reduced reserve requirements, expanded investment channels for private funds, and accelerated tax reforms to stimulate the economy.
The HSBC Flash PMI for July, the earliest available indicator of China's industrial sector and which is slanted more towards private and export-oriented firms, rebounded to 49.5 from June's official reading of 48.2.
Although it remained under 50 which separates expansion from contraction, the data indicated a fast pace of recovery, said Qu Hongbin, chief economist for China at HSBC.
"July's flash PMI data picked up to a five-month high, suggesting the earlier easing measures are starting to work," Qu said.
However, given the still weak demand and employment implied by the below-50 data, Qu said more easing efforts are needed to support growth and jobs.
"We believe the fast falling inflation allows China to do so and a more meaningful improvement of growth is expected in the coming months when these measures fully filter through," Qu added.
China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, the slowest pace in three years.
Meanwhile, Consumer Price Index, the main gauge of inflation, rose 2.2 percent year on year in June, a 29-month low that allowed more room for policy easing.
Zhang Zhiwei, an economist at Nomura, said recent signs indicated a prolonged downturn which makes the government feel greater urgency to loosen policy, and that public investment will likely pick up in the coming months.
Earlier this month, China cut interest rates for the second time in one month to lower borrowing costs for business and investment.
Before that, China had reduced reserve requirements, expanded investment channels for private funds, and accelerated tax reforms to stimulate the economy.
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