China Manufacturing Strengthens

June 2nd, 2014
in econ_news, syndication

Econintersect:  The government's official PMI (Purchasing managers' Index) breaking-news-130px7rose to the highest level in five months for May, recording a reading of 50.8, up from 50.4 in April.  The number beat expectations of 50.7.  The government has picked up efforts to increase spending in recent weeks, with stepped up investment in railway facilities and pressures on local governments to commit funds at a faster rate.  Observers commented that this move probably was not strong enough to satisfy the government and further stimulus might be forthcoming.

Follow up:

A second PMI survey taken by HSBC and reported by Markit had a preliminary ("flash") reading last week of 49.7, up sharply from April.  Although the reading was below the 50 demarcation between contraction and expansion, the strong jump was generally considered  to be a positive development.  The government survey is concentrated on mostly large and predominantly government owned firms while the HSBC surveys smaller, privately owned enterprises.  The final report for HSBC PMI is due 03 June.

The government PMI does have a separate section for mid-sized companies and that number was stronger than for large companies, jumping from 50.3 in April to 51.4 for May.  After a downturn in April industrial production and retail sales both grew in May.  These stronger numbers were offset by a 22% drop in new construction over the first four months of 2014.


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