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Q2 confidence index sags though business climate improved
By Wang Yanlin |
July 8, 2011, Friday
|
Online Edition
Online Edition
CHINESE business climate improved in the second quarter but business confidence dropped further, the National Bureau of Statistics said today.
Business Climate Index, which measures both macroeconomic environment and microeconomic performance, edged up 1.8 points from the first quarter to 135.6 in the April-June period.
In contrast, Business Confidence Index, a gauge of sentiment among producers, lost 5 points to 132.4.
A reading above 100 indicates expansion or optimism, while a reading under 100 signals contraction or pessimism.
"The tightening monetary policy has eroded the confidence of businesses," said Li Maoyu, an analyst at the Changjiang Securities Co. "But in the second quarter, China did not introduce as many aggressive measures as expected for fear of slower economic growth. That's why the overall business climate improved."
China announced the latest interest rate increase on Wednesday, and economists called the raise "a move coming too late" as China only lifted interest rates once in the second quarter on April 5.
China's untamed inflation has kept policymakers holding on to their tightening stance, but they are reluctant to adopt more aggressive measures such as interest rate hikes lest it would attract an inflow of speculative money.
China's Consumer Price Index, the main gauge of inflation, climbed 5.5 percent from a year earlier in May, a 34-month high. Some expected the June figure may surge 6 percent due to rising prices of pork and other food.
"Higher production costs also made business people less confident about the future as is reflected in the lower confidence index among smaller firms, which are more vulnerable to credit squeeze and soaring costs," said Xue Jun, an analyst at the CITIC Securities Co.
According to the bureau, confidence index among small companies stayed at 119.8 in the second quarter, much lower than 142 and 133.3 for large and medium-sized companies respectively.
Confidence among foreign-invested firms stood at 135.6 while those owned by Hong Kong, Macau and Taiwan investors had a reading of 134.4.
Business Climate Index, which measures both macroeconomic environment and microeconomic performance, edged up 1.8 points from the first quarter to 135.6 in the April-June period.
In contrast, Business Confidence Index, a gauge of sentiment among producers, lost 5 points to 132.4.
A reading above 100 indicates expansion or optimism, while a reading under 100 signals contraction or pessimism.
"The tightening monetary policy has eroded the confidence of businesses," said Li Maoyu, an analyst at the Changjiang Securities Co. "But in the second quarter, China did not introduce as many aggressive measures as expected for fear of slower economic growth. That's why the overall business climate improved."
China announced the latest interest rate increase on Wednesday, and economists called the raise "a move coming too late" as China only lifted interest rates once in the second quarter on April 5.
China's untamed inflation has kept policymakers holding on to their tightening stance, but they are reluctant to adopt more aggressive measures such as interest rate hikes lest it would attract an inflow of speculative money.
China's Consumer Price Index, the main gauge of inflation, climbed 5.5 percent from a year earlier in May, a 34-month high. Some expected the June figure may surge 6 percent due to rising prices of pork and other food.
"Higher production costs also made business people less confident about the future as is reflected in the lower confidence index among smaller firms, which are more vulnerable to credit squeeze and soaring costs," said Xue Jun, an analyst at the CITIC Securities Co.
According to the bureau, confidence index among small companies stayed at 119.8 in the second quarter, much lower than 142 and 133.3 for large and medium-sized companies respectively.
Confidence among foreign-invested firms stood at 135.6 while those owned by Hong Kong, Macau and Taiwan investors had a reading of 134.4.
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