Econintersect: The “Flash” PMI (Purchasing mangers’ Index) for China from HSBC has surged in August from the lowest reading in 11 months in July (47.7) to 50.1. By rising above 50 the indicator has risen above the demarcation line between contraction and expansion. The improving reading follows moves by the Chinese government to shore up the country’s economy.
All major components of the survey were above 50 except for employment (rose, but remained below 50) and new export business which declined but remained above a multi-year low reached in May. Other components were also mixed as shown in the table above. The major components (and the overall PMI) are shown in the graphs below.
Comments on the report were mixed, but mostly positive.
From Reuters:
“It confirms that the economy has stabilised in the short term and downside risks for H2 have declined.” – – – Zhiwei Zhang, China economist at Nomura in Hong Kong.
“This is mainly driven by the initial filtering-through of recent fine-tuning measures and companies’ restocking activities, despite the continuous external weakness. We expect further filtering-through, which is likely to deliver some upside surprises to China’s growth in the coming months.” – – – Hongbin Qu, chief China economist at HSBC.
“…annual economic growth may hover around 7.5 percent in the third and fourth quarters of 2013. As long as China’s growth rate remains above 7 percent, there will be no crisis. Double-digit growth is not in line with China’s new reality.” – – – Fan Jianping, chief economist at the State Information Centre, a top government think-tank.
From Bloomberg:
“Domestic demand is strong enough to support 7.5 percent growth in 2013. Almost all of China’s economic data since July has shown improvements and suggests a rebound is underway.” – – – Ken Peng, senior economist at BNP Paribas SA in Beijing.
“The biggest contribution to the gain in today’s PMI reading was from production and new orders. Domestic demand is being driven by recovery in the property sector while government support for infrastructure will start to show an effect in the next two months The problem is whether such stimulus is sustainable. We are still relying on investment for growth and there will be downside risks beyond the third quarter.” – – – Yao Wei, China economist at Societe Generale SA in Hong Kong.
Sources:
- Operating conditions stabilise in August (HSBC Puchasing managers’ Index (Press Release, Markit, 22 August 2013)
- Upbeat China August flash HSBC PMI points to stabilising growth (Kevin Yao, Reuters, 22 August 2013)
- China’s Manufacturing Gains on Stronger Domestic Demand: Economy (Bloomberg News, 22 August 2013)
