Econintersect: The composite PMI for China from HSBC surged to 52.4 in June, up from 50.2 in May. The manufacturing index returned to expansion (50.7) after six months below 50. New orders were especially strong.
It is significant that the strengthening economy appears to be occurring across wide areas of the Chinese economy. Currently the numbers from the HSBC survey and the official government survey are in close agreement. The HSBC PMI covers mostly small and medium sized privately held firms The official government survey covers mostly large and government owned firms. Over the past three years the government PMI results have been considerably higher than then the HSBC numbers most months.
Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC commented on the report from his survey:
“The HSBC China Services PMI headline index rose to 53.1 in June, the highest reading since March 2013. Both new and existing business indices rebounded, suggesting stronger economic momentum. The employment index also improved over the month, as increased economic activity lifted labour demand.
The expansion in the service sector reinforces the recovery seen in the manufacturing sector, and signalled a broad-based improvement over the month.
We think the economy is slowly turning around, and expect the recovery to remain supported by accommodative policies on both the fiscal and monetary fronts over the coming months. The slowdown in the property market still poses downside risks, however, and may warrant further easing measures in 2H 2014.”
Sources:
- Composite output expands at fastest rate since March 2013 (Press release, Markit, 03 July 2014)
- China: HSBC PMI Indicates Expansion for First Time in Six Months (GEI News, 23 June 2014)
- China HSBC June final PMI at 50.7, official PMI at 51 (CNBC, 30 June 2014)
