China: Manufacturing Growth Struggles to Remain Positive

May 1st, 2013
in econ_news, syndication

Econintersect:  The official PMI (Purchasing Managers' Index) produced a reading of breaking-news-130px750.6 for April 2013, down from 50.9 in March but still stronger than the 50.1 reading for February.  The current reading is essentially the same as seen in December (50.6) and January (50.4) and was weaker than expected.  Last week a disappointing preliminary reading for the HSBC PMI, which covers privately owned small and mid-sized companies, gave an early warning that manufacturing was not as strong as had been hoped.

Follow up:

The preliminary HSBC PMI reading came in at 50.5 (down from 51.6 in March).  The April readings between the HSBC and the official PMI, which covers mostly large corporations and state owned companies,  are nearly identical.  However that is not only the case as the two often disagree.  In fact, last year the smaller company index was in contraction (below 50) for most of the year while the official PMI was above 50 for all but two months.

Comments from several sources:

China Federation of Logistics and Purchasing, which publishes the PMI with the National Bureau of Statistics (from Xinua,

“The slight fall in the PMI reading for April shows that the economic recovery is still not on a solid foundation.”

Alvin Pontoh, economist at TDSecurities in Singapore (from Reuters):

"Overall, my general feel is that China is growing but slower than people expected say a month ago.  But I don't think this is reason for alarm... this is probably what the new administration is looking for. Structurally, China cannot grow at 9 or 10 percent any more, so over the next few years, you'd reasonably expect growth to edge lower to say 7 percent or so".

Zhang Liqun, an analyst from the Development Research Center of the State Council (from China Daily):

"The decline in orders caused the fall in the inventory level, and a sharp drop in the sub-index for purchasing prices of raw materials suggests the corporate confidence was undermined.  Efforts should be made to stabilize domestic demand."

Alistair Thornton, in the Financial Times:

“The most worrying aspect of this is not that growth is weak, but that growth is weak despite a torrent of new credit issuance.”


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