Key index indicates rebound

08:33, September 02, 2010      

Email | Print | Subscribe | Comments | Forum 

Manufacturing in China rebounded in August, easing fears of a steep correction to the economy, analysts said.

The Purchasing Managers' Index (PMI), a major indicator of economic activity, rose to 51.7 percent in August, up 0.5 percentage points from the July figure, and reversed a three-month fall in the growth rate, the China Federation of Logistics and Purchasing said on Wednesday.

The index considers 50 to be a benchmark figure and the dividing line between economic expansion and contraction. Anything above 50 indicates expansion.

Economists have been concerned about a slowdown, especially when US growth dropped to 1.6 percent in the second quarter, from a previous estimate of 2.4 percent in July.

Neither is news on the job front in the European Union good with the unemployment rate hitting an almost two-decade high.

A research note from the Industrial Securities said the rebound showed domestic demand is playing an increasingly important role, with the nation relying less on foreign trade for growth.

"China's recovery in the third quarter is helping prevent the world from a double dip recession," the note said.

Zhang Liqun, a researcher at the State Council's Development and Research Center, said he believed the PMI rebound indicated that China's economy was not likely to see a steep correction.

"But attention should be paid to the big rebound in the Input Price Index (IPI), which might increase pressure on companies' costs."

The IPI jumped 10.1 points last month to 60.5.

"Overall, the leading indicators in August point to some near-term strength in manufacturing activity and a rebound in input cost pressures," said Peter Redward, head of Emerging Asia Research at Barclays Capital.

"Looking ahead, we expect a further pickup in the headline PMI in September before moderating in October."

However, Lu Zhengwei, chief economist of Industrial Bank, said he believed the rebound was largely due to seasonal factors.

Historically, the PMI tended to rise month-on-month from August to September, after declining from May to July.

"Without seasonal factors, the rebound is quite weak and should not be regarded as a signal for economic recovery," Lu said.

Despite the improved PMI statistics, most economists believe China's economic growth will continue to slow in the coming months.

"We expect gross domestic product (GDP) growth to slow further, bottoming at 8 to 8.5 percent year-on-year in the fourth quarter as the impact of the property tightening becomes more apparent and export growth slows," said Wang Tao, head of China Economic Research at UBS Securities.

"But the new investment programs announced this year will help push up investment and GDP growth from the first quarter of 2011, and we expect the growth to be 9.5 to 10 percent for the whole year," Wang added.

Source:China Daily

(Editor:黄蓓蓓)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Players of Iran throw up their coach Velasco Julio during the awarding ceremony at the 16th Asian Men's Volleyball Championship in Tehran, capital of Iran, Sept. 29, 2011. Iran won the champion after beating China 3-1 in the final on Thursday. (Xinhua/Ahmad Halabisaz)
  • Greek artists burn copies of emergency tax notices during a protest against austerity measures in Athens, Greece, on Sept. 29, 2011. The Greek government is facing a new wave of protests as it introduces new austerity measures to obtain the sixth tranche of aids necessary to overcome the acute debt crisis.(Xinhua/Marios Lolos)
  • A winner of the 36th Miss Bikini International 2011 poses for a photo at the Olympic Sailing Center in Qingdao, a coastal city of east China's Shandong Province, Sept. 29, 2011. (Xinhua/Chen Jianli)
  • Staff members are in position at Beijing Aerospace Control Center in Beijing, capital of China, Sept. 29, 2011. Commander-in-chief of China's manned space program Chang Wanquan announced Thursday night that the launch of Tiangong-1 space lab module was successful. (Xinhua/Rao Aimin)
  • Champion of Miss Bikini from Poland receives trophy at the final of the 36th Miss Bikini International World Competition in Qingdao, east China's Shandong Province, Sept. 28, 2011. (Xinhua Photo)
  • Photo taken on Sept. 28, 2011 shows autumn scenery of populus euphratica forests in Ejina Banner, north China's Inner Mongolia. The populus euphratica forests here, with an area of 390,000 mu, or 26,000 hectares, is one of the world's most famous populus euphratica forests. The golden leaves and sunshines here in autumn is able to attract more than 100,000 person-times annually. (Xinhua/Zhao Tingting)
Hot Forum Discussion