Manufacturing may rebound
By Wang Yanlin |
October 25, 2011, Tuesday
|
Print Edition
Print Edition
CHINA'S manufacturing activities may rebound thanks to growing new orders, a preliminary reading for the HSBC Purchasing Managers' Index showed yesterday.
The HSBC Flash PMI, the earliest available indicator of the industrial sector's operating conditions, rose to a five-month high of 51.1 in October, up from September's final reading of 49.9. A reading above 50 means expansion, while one below 50 points to contraction of manufacturing activities.
"Thanks to the pick-up in new orders and output, the headline flash PMI rebounded back into expansionary territory during October, marking a steady start to manufacturing activities in the fourth quarter," said Qu Hongbin, chief economist for China at HSBC.
"Meanwhile, inflation components within the PMI confirmed stable output prices growth and slower input price inflation. All these data confirm our view that there is no risk of a hard landing in China," Qu said.
China's industrial production quickened 0.3 percentage point from August last month, reversing a moderating pace since July and helping the third-quarter gross domestic product to hold at 9.1 percent.
Together with rising retail sales and stable investment, many economists have said China's economy is unlikely to slide into a recession as some developed countries may do.
The official PMI, compiled by the China Federation of Logistics and Purchasing, expanded for a second consecutive month to 51.2 in September from 50.9 a month earlier. It confirmed a faster recovery in big domestic companies while the HSBC survey is slanted more towards privately-owned and export-oriented firms.
Chang Jian, an economist at Barclays Capital, estimated the official PMI, to be released next Tuesday, to still post a modest gain.
"The current growth and inflation mix is unlikely to lead to a shift in policy stance or broad-based easing before the Central Economic Work Conference to be held in early December," Chang said in a note. "Selective easing in financial and fiscal policies is under way and should provide some relief to small enterprises."
Chang projected China's economic growth will slow to 8.4 percent next year after expanding 9.1 percent this year. The rate should help to balance the downside risks from a possible weakening external demand.
But contrary to expectations of deteriorating external demand, new export orders strengthened in October, the component index of the HSBC Flash PMI showed. Meanwhile, factory price pressures eased, with the input price index falling to 54.3 from 58.8 in September.
The HSBC Flash PMI, the earliest available indicator of the industrial sector's operating conditions, rose to a five-month high of 51.1 in October, up from September's final reading of 49.9. A reading above 50 means expansion, while one below 50 points to contraction of manufacturing activities.
"Thanks to the pick-up in new orders and output, the headline flash PMI rebounded back into expansionary territory during October, marking a steady start to manufacturing activities in the fourth quarter," said Qu Hongbin, chief economist for China at HSBC.
"Meanwhile, inflation components within the PMI confirmed stable output prices growth and slower input price inflation. All these data confirm our view that there is no risk of a hard landing in China," Qu said.
China's industrial production quickened 0.3 percentage point from August last month, reversing a moderating pace since July and helping the third-quarter gross domestic product to hold at 9.1 percent.
Together with rising retail sales and stable investment, many economists have said China's economy is unlikely to slide into a recession as some developed countries may do.
The official PMI, compiled by the China Federation of Logistics and Purchasing, expanded for a second consecutive month to 51.2 in September from 50.9 a month earlier. It confirmed a faster recovery in big domestic companies while the HSBC survey is slanted more towards privately-owned and export-oriented firms.
Chang Jian, an economist at Barclays Capital, estimated the official PMI, to be released next Tuesday, to still post a modest gain.
"The current growth and inflation mix is unlikely to lead to a shift in policy stance or broad-based easing before the Central Economic Work Conference to be held in early December," Chang said in a note. "Selective easing in financial and fiscal policies is under way and should provide some relief to small enterprises."
Chang projected China's economic growth will slow to 8.4 percent next year after expanding 9.1 percent this year. The rate should help to balance the downside risks from a possible weakening external demand.
But contrary to expectations of deteriorating external demand, new export orders strengthened in October, the component index of the HSBC Flash PMI showed. Meanwhile, factory price pressures eased, with the input price index falling to 54.3 from 58.8 in September.
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