State firms boost manufacturing
Print Edition
CHINA’S state-owned manufacturers delivered their best performance in more than two years with the overall sector improving more than expected in July.
The official Purchasing Managers’ Index, a comprehensive gauge of operating conditions in state-owned industrial companies, came in at 51.7 last month. It was up from 51 in June and was the strongest since April 2012, the China Federation of Logistics and Purchasing said yesterday. A reading above 50 means expansion.
Zhao Qinghe, a researcher at the National Bureau of Statistics, said the data reinforced signs that China’s economy was firming up on government-backed policies. “The better-than-expected data marked the fifth monthly improvement of PMI,” Zhao said. “It was a result of the growth-stabilizing policies and the continuously improving external demand, which helped boost production and new orders.”
Zhou Hao, an economist with Australia and New Zealand Banking Group, said the rising PMI fueled optimism over China’s economy.
“The improvement of the official PMI is broad-based,” Zhou said. “The acceleration of fiscal spending should boost momentum. Meanwhile, policies to bolster lending to targeted sectors have improved market sentiment as well.”
The components showed that new orders increased 0.8 points from a month earlier to 53.6 in July, the highest in 26 months. Production also picked up 1.2 points to 54.2, while new export orders increased for the third consecutive month to 50.8, suggesting a continuing recovery in trade as outside demand strengthened.
Meanwhile, the HSBC Purchasing Managers’ Index, which represents private and smaller manufacturers, was also 51.7 in July. It was up from 50.7 in June, and was the highest reading since March 2013, according to HSBC Holdings Plc and research firm Markit.
Although the final reading of HSBC PMI was lower than its flash of 52, Qu Hongbin, chief economist for China at HSBC, said China’s economy was improving sequentially and registered across-the-board improvement compared with a month earlier.
“It is the second consecutive month the HSBC PMI pointed to expansion,” Qu said.
“Policy-makers are expected to continue with targeted easing, and the cumulative impact of these measures will filter through in the next few months to help consolidate the recovery.”
China’s gross domestic product expanded 7.5 percent from a year earlier in the second quarter of this year — quicker than the pace of 7.4 percent in the first three months.
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