China’s August PMI rebounds to 51.7%, to rise further - analysts

01 September 2010 07:55  [Source: ICIS news]

SINGAPORE (ICIS)--Manufacturing activities in China have rebounded after declining for three months as a slow rise in demand seems to have aided industrial growth, analysts said on Wednesday.

The country’s Purchasing Managers Index (PMI), which gauges the level of activities across various industries, rebounded to 51.7%, a 0.5 percentage points rise over July when it touched a 17-month low, according to the China Federation of Logistics & Purchasing (CFLP).

While the PMI had consistently declined over the past three months, it had continued to maintain a reading above 50%, which indicated expansion, CFLP said in its report. 

Analysts expected the PMI to rise over the next couple of months as the country’s economic expansion gathers steam after the temporary slump caused by the credit curbs implemented by the government.

“It’s a modest rebound, although [it is] not very strong. The data will grow gradually in the next few months on a steady consumption and housing market-related consumption,” said Jun Ma, chief economist of the greater China region at Deutsche Bank in Hong Kong.

August PMI data showed that there had been a rise in demand over July as the new orders index rose 2.2 percentage points to 53.1% while the new export orders rose 1.0 percentage points to 52.2%.

“We can say now that China’s recovery is very clear based on the PMI data in August,” Dong Xian’an, chief economist from brokerage house Industrial Securities in Beijing said.

The PMI index serves as a barometer of the monthly performance of China’s factories and is based on surveys conducted with purchasing and supply managers at 820 manufacturers across 20 industries across the country.

The industry production index in August rose 0.4 percentage points to 53.1%, CFLP said in the report while the purchasing price index soared 10.1 percentage points to 60.5%, the report showed.

“I think the government will ease the tightening monetary policy gradually given China’s economic expansion slowed to 10.3% in the second quarter [of 2010] from 11.9% in January to March period,” Dong Xian’an added.

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By: Judith Wang
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