Partly Cloudy
30°CSat :Partly Cloudy. High: 33 Low: 22

China’s manufacturing activity hits four-month high in August

China's manufacturing activity hits four-month high in August

Beijing: Activity in China’s vast manufacturing sector hit a four-month high in August as new orders rebounded, a preliminary private survey showed on Thursday, reinforcing signs of stabilisation in the world’s second-largest economy.

The Flash HSBC Purchasing Managers’ Index rose to 50.1 from July’s final reading of 47.7, which was the weakest in 11 months, though it barely passed the watershed 50 line which demarcates expansion of activities from contraction.

The government has announced a series of targeted measures to support the slowing economy, including scrapping taxes for small firms, offering more help for ailing exporters and boosting investment in urban infrastructure and railways.

“It confirms that the economy has stabilised in the short term and downside risks for H2 have declined,” said Zhiwei Zhang, China economist at Nomura in Hong Kong.

The Australian dollar jumped and Asian shares pared early losses after the PMI report but investors remained wary of negative fallout for Asia if the U.S. central bank begins to taper back its massive stimulus programme as early as next month.

Copper rose and crude oil prices bounced off their early lows.

A sub-index measuring new orders rose to a four-month high of 50.5 in August from 46.6 in July. But the sub-index on new export orders edged lower in a reminder of weak global demand.

The employment sub-index of the flash PMI also picked up in August, but still hovered below the 50 watershed line.

“This is mainly driven by the initial filtering-through of recent fine-tuning measures and companies’ restocking activities, despite the continuous external weakness,” said Hongbin Qu, chief China economist at HSBC.

“We expect further filtering-through, which is likely to deliver some upside surprises to China’s growth in the coming months.”

The flash HSBC PMI, compiled by Markit Economics Research, is the earliest available indicator of monthly activity in the Chinese economy, and tends to focus more on small to mid-sized firms in the private sector.

NO QUICK RECOVERY IN SIGHT

Analysts in a Reuters poll forecast annual GDP growth of 7.4 percent in the third quarter and the full-year growth of 7.5 percent, in line with the official target.

But Zhang at Nomura said he saw upside risks to his 7.4 percent GDP forecast for the third quarter as growth may pick up from the 7.5 percent pace in the second quarter.

“Nonetheless we believe a strong H2 recovery to above 8 percent is unlikely, as rising interest rates will pressure investment. We still expect growth to slow to 6.9 percent in 2014.”

Fan Jianping, chief economist at the State Information Centre, a top government think-tank, said annual economic growth may hover around 7.5 percent in the third and fourth quarters of 2013.

“As long as China’s growth rate remains above 7 percent, there will be no crisis. Double-digit growth is not in line with China’s new reality,” he told reporters on Wednesday.

Like some of its emerging market neighbours, China saw capital outflows for the second consecutive month in July, suggesting its sluggish economy is still deterring investors. But the pace at which money is leaving the country appears to be slowing and its markets have not been as volatile as in India or Southeast Asia.

The final HSBC PMI for August is due to be published on September 2, a day after the release of an official government survey. The official PMI, which focuses on big and state-owned firms, has been generally rosier than the private survey, which targets small and private companies.

Annual profit growth in China’s state firms picked up pace in the first seven months of 2013, official data showed on Tuesday, offering new signs that the economy may be regaining momentum in the second-half of the year.

Upbeat data for July ranging from factory output and exports to retail sales has raised hopes that China’s economy may be stabilising after slumping for more than two years.

Chinese leaders, while making clear they will accept some economic slowdown as they push through reforms, have expressed confidence of meeting their 7.5 percent growth target this year – which would be China’s slowest growth in 23 years.

Annual economic growth slowed to 7.5 percent in the April-June period from the 7.7 pct in the previous three months – the ninth quarter of slowdown in the past 10 quarters.

 

Top Stories

pioneer-624x351.png

Pioneer launches AVIC-F60BT premium in-car navigation and entertainment system

July-25-2014
In-car entertainment systems company Pioneer has launched its premium audio-video system, the Pioneer AVIC-F60BT, in India. Pioneer, which has already promised to
INSRANCE_THINKSTOCK-624x416

49% FDI in insurance: What it means for customers

July-25-2014
The Cabinet’s approval to increase the FDI limit in the insurance sector to 49 percent is expected to benefit the companies first
images

Businessman buys Rajesh Khanna’s bungalow ‘Aashirwad’ for Rs 90 crore

July-25-2014
MUMBAI: Bollywood superstar Rajesh Khanna’s Carter Road bungalow, popularly known as ‘Aashirwad’, is being sold to a city industrialist. The landmark sea-facing
Kick-Review-650

‘Kick’ review: Strictly for Salman Khan fans

July-25-2014
When Sajid Nadiadwala decided to step into the director`s shoes, he pulled all stops. He has invested everything he could to make
sanjita-gold-740

Commonwealth Games: Lifters Sukhen, Sanjita win gold as India make rousing start

July-25-2014
Glasgow: Sukhen Dey and K Sanjita Chanu stole the limelight by clinching a gold each in weightlifting, as India launched their campaign
M_Id_477210_FM_Arun_Jaitley

India will not have to wait for bringing back black money: Jaitley

July-25-2014
Finance Minister Arun Jaitley today said that India will not have to wait for long for bringing back the black money. He