China: Manufacturing Returns to Growth

Econintersect:  The official PMI (Purchasing Manager Index) for China moved back above the 50 line which marks the boundary between expansion and contraction.  The number for October was reported at 50.2, the first expansion indicator since July.  The final number was also announced for the HSBC PMI, which came in at 49.5, up from the preliminary reading of 49.1 last week and sharply higher than the 47.9 seen for September.  This was the twelfth consecutive month below 50 for the HSBC PMI but was the highest reading in eight months.

The official PMI covers mainly larger and SOEs (state owned enterprises) while the HSBC survey concentrates on smaller, privately owned companies with strong dependencies on exports.

The official position of the China government was summarized by this from the Financial Times:

“This shows that the economy has already bottomed out and stabilized,” said Zhang Liqun, an economist with the Development Research Centre, a think-tank under the State Council, or cabinet. “We expect that economic growth has stopped slowing, and there will now be a slight recovery.”

John Lounsbury

Sources:

• Official Website of National Bureau of Statstics of China

• China’s manufacturers return to growth (Simon Rabinovitch, Financial Times, 01 November 2012)

• China:  PMI Improves Sharply, But Still Below 50 (GEI News, 24 October 2012)