China's PMI index points to uptick in economy

(Shanghai Daily)

08:21, September 02, 2011

A 93,000-ton bulk cargo vessel leaves a shipyard of Shanhaiguan Shipbuilding Industry Co in Qinhuangdao, north China's Hebei Province, for its maiden voyage on Wednesday. China's official Purchasing Managers' Index yesterday showed the country's industrial activities rebounded slightly in August for the first time in five months as the Chinese economy continued to stabilize. (Shanghai Daily Photo)
CHINA'S industrial activities rebounded slightly in August for the first time in five months as the country's economy continued to stabilize.

The Purchasing Managers' Index, a comprehensive gauge of manufacturing activities across the country, rose to 50.9 points last month, the China Federation of Logistics and Purchasing said yesterday.

It was a slight rebound from the rate of 50.7 in July, a 29-month low that stayed close to the borderline of 50, which separates expansion from contraction.

Zhang Liqun, an analyst at the federation, said the index's rebound, though slight, was a sign of the domestic economy stabilizing.

"The risks of overheating have been ruled out, and the economy has started to stabilize," Zhang said. "But there are still uncertainties in external demand because new export orders fell the most among all the component indices last month."

According to the federation, the index of new export orders lost 2.1 points from a month earlier to 48.3 in August as the debt crisis continued to linger in the United States and Europe.

The expansion in China's gross domestic product moderated in the first half of this year as the economy grew an annual 9.5 percent in the second quarter and 9.7 percent in the first three months.

The PMI data eased fears that the economy would overheat and suffer a hard landing, which analysts had worried when the country's economy surged 11.9 percent in the first quarter of last year.Sun Chi, an economist at Nomura, forecasts China's GDP will grow 9.3 percent from a year earlier in the third quarter of this year and 9.5 percent in the final three months.

The HSBC China Manufacturing Purchasing Managers' Index, which is slanted toward privately-owned and export-oriented firms, also revealed a similar change.

The HSBC PMI rose for the first time in three months to settle at 49.9 in August, up from July's 49.3.

"It confirms our view that China will grow moderately in the coming months," said Qu Hongbin, chief economist for China at HSBC.
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