China: Official PMI Rises Slightly, Still Indicates Contraction

October 1st, 2012
in econ_news, syndication

Econintersect: The official Purchasing Managers' Index has been breaking-news-130pxreleased by the National Bureau of Statistics of China.  The index rose slightly to 49.8, with the reading below 50 indicating that conditions were slightly below the demarcation (50) between contraction and expansion.  The number was higher than the August reading of 49.2 but below the consensus estimate of 50.1.  This was the second month in a row that the official PMI failed to read 50 or higher.

Follow up:

The official PMI is focused on larger state-owned firms.  The  HSBC PMI was also reported this weekend.  The HSBC poll looks at smaller, mostly private, firms (with a high sensitivity to exports) was also announced this weekend.  HSBC found manufacturing output fell at the fastest pace since March, with the overall index at 47.9 in September, slightly higher than the preliminary reading of 47.8 reported 10 days ago and barely above the  low August reading of 47.6.

The HSBC PMI has been below 50 for the past 11 months.  The readings as low as the past two months have not been seen since the spring of 2009 during the Great Recession.

There is general concern about the slowdown in China.  From ABC News (Australia):

Commenting on the unofficial PMI over the weekend, HSBC's chief China economist Hongbin Qu said more stimulus measures are needed to ensure the nation's economy resumes its upward trajectory.

"Chinese manufacturing growth is likely to be bottoming out," he noted in the bank's report.

"However, the sharper contraction of new export orders and the lingering pressures on job markets mean that Beijing should step up easing to support growth and employment."

John Lounsbury



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