PMI posts slow pace growth
By Wang Yanlin |
March 2, 2010, Tuesday
|
Print Edition
Print Edition
CHINA'S manufacturing activity grew at a slower pace in February, according to a pair of indices yesterday.
But economists are optimistic that the slower pace in PMI growth is not something to worry about as they believe manufacturing will rebound.
The official Purchasing Managers Index, a measure of the nation's manufacturing activities, touched 52 percent in February, down 3.8 percentage points from a month earlier, the China Federation of Logistics and Purchasing said.
The HSBC China Manufacturing PMI also slipped to a three-month low of 55.8 in February, from 57.4 in the previous month.
The official index has stayed above 50 - indicating expansion - for 12 straight months. The HSBC index has risen for 11 straight months, pointing to an expansion.
The official PMI is weighted heavily toward big domestic companies while the HSBC survey is slanted toward privately owned and export-oriented firms.
"Despite the moderation in PMI, the growth momentum for China's manufacturing sector remains strong, pointing to a further acceleration in industrial activities in coming quarters," said Qu Hongbin, chief economist for China at HSBC.
Qu's comment was based on findings by the HSBC survey that output rose markedly on gains in new orders.
However, Shen Minggao, an economist at Citigroup, said the weaker expansion in PMI was due to the government's measures to tighten credit. He added that policy uncertainties might affect manufacturers' plans to grow investments.
"Slower investment growth has been evident since last quarter, which probably overshadowed stronger exports and consumption since," Shen said. But he was not all pessimistic, saying the easing in the PMI might have exaggerated downward pressure on the Chinese economy, and a rebound is likely in the coming months.
The readings were also likely affected by a factory shutdown for the Spring Festival, which this year fell in February. "Although PMI indicators are seasonally adjusted, it may still be affected by seasonal effects, such as more orders being placed ahead of January 1st and the Chinese New Year," Shen said.
But economists are optimistic that the slower pace in PMI growth is not something to worry about as they believe manufacturing will rebound.
The official Purchasing Managers Index, a measure of the nation's manufacturing activities, touched 52 percent in February, down 3.8 percentage points from a month earlier, the China Federation of Logistics and Purchasing said.
The HSBC China Manufacturing PMI also slipped to a three-month low of 55.8 in February, from 57.4 in the previous month.
The official index has stayed above 50 - indicating expansion - for 12 straight months. The HSBC index has risen for 11 straight months, pointing to an expansion.
The official PMI is weighted heavily toward big domestic companies while the HSBC survey is slanted toward privately owned and export-oriented firms.
"Despite the moderation in PMI, the growth momentum for China's manufacturing sector remains strong, pointing to a further acceleration in industrial activities in coming quarters," said Qu Hongbin, chief economist for China at HSBC.
Qu's comment was based on findings by the HSBC survey that output rose markedly on gains in new orders.
However, Shen Minggao, an economist at Citigroup, said the weaker expansion in PMI was due to the government's measures to tighten credit. He added that policy uncertainties might affect manufacturers' plans to grow investments.
"Slower investment growth has been evident since last quarter, which probably overshadowed stronger exports and consumption since," Shen said. But he was not all pessimistic, saying the easing in the PMI might have exaggerated downward pressure on the Chinese economy, and a rebound is likely in the coming months.
The readings were also likely affected by a factory shutdown for the Spring Festival, which this year fell in February. "Although PMI indicators are seasonally adjusted, it may still be affected by seasonal effects, such as more orders being placed ahead of January 1st and the Chinese New Year," Shen said.
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