Chinese Manufacturing Gauge Jumps as Economy Strengthens

Bloomberg

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A Chinese manufacturing index rose in August from the lowest level in 11 months, adding to signs the world's second-biggest economy is strengthening after a two-quarter slowdown.

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Chinese Manufacturing Gauge Jumps as Economy Strengthens

By Bloomberg News - Aug 21, 2013 7:35 PM PT

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A Chinese manufacturing index rose in August from the lowest level in 11 months, adding to signs the world’s second-biggest economy is strengthening after a two-quarter slowdown.
The preliminary reading of 50.1 for a Purchasing Managers’ Index (EC11FLAS) released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 47.7 in July. The number was higher than all 16 estimates in a Bloomberg News survey. A number above 50 indicates an expansion.

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A factory worker assembles lithium ion batteries at the China BAK Battery Inc. facility in Tianjin. Photographer: Keith Bedford/Bloomberg

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Aug. 22 (Bloomberg) -- Freya Beamish, Hong Kong-based economist with Lombard Street Research, talks about China's economy. She speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)

Domestic demand fueled the gain after Premier Li Keqiang rolled out measures to support growth, including tax breaks for small businesses and an increase in railway investment. An index of export orders slid at a faster pace, indicating limits on the boost that China can expect from overseas orders as the U.S. Federal Reserve considers winding back stimulus.
“China’s manufacturing growth has started to stabilize,”Qu Hongbin, HSBC’s Hong Kong-based chief China economist said in a statement. He predicted “upside surprises to China’s growth in the coming months.”
The Shanghai Composite Index (SHCOMP) rose 0.1 percent as of 10:30 a.m. local time after earlier falling as much as 0.5 percent.
China will reach the government’s 7.5 percent growth target this year and maintain that pace in 2014, a Bloomberg News survey of economists indicates.

Debt Worries

Today’s data add to better-than-estimated gains in industrial output and imports in July, which improved the nation’s outlook even as Li grapples with containing financial risks after a credit boom. The State Council last month ordered the first nationwide audit of government debt in two years.
Investors are looking ahead to a meeting later this year where the Communist Party’s new leaders may unveil a blueprint for policy measures to sustain growth in coming years as higher labor costs and a shrinking working-age population weigh on the pace of expansion.
Today’s report, known as the Flash PMI is based on about 85 percent to 90 percent of responses to surveys sent to more than 420 manufacturers. The final reading is due Sept. 2.
The National Bureau of Statistics and China Federation of Logistics and Purchasing will release their own survey of purchasing managers on Sept. 1. The gauge’s July reading unexpectedly strengthened to 50.3 from 50.1 the previous month.
To contact Bloomberg News staff for this story: Hu Shen in Beijing at hshen33@bloomberg.net
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Chinese Manufacturing Gauge Jumps as Economy Strengthens