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HSBC expects rebound in manufacturing activities through April

By Li Qiaoyi (Global Times)

08:09, April 24, 2012

Manufacturing activities are likely to see a recovery this month, bouncing back from the four-month low of March, a preliminary survey of the country's manufacturing sector by HSBC showed yesterday.

The flash China purchasing managers' index (PMI) reading rose slightly to 49.1 in April from 48.3 last month as output and export orders edged up, although the manufacturing sector has seen a contraction rather than expansion for a sixth month in a row as indicated by the HSBC PMI readings. A PMI reading of 50 marks the demarcation between expansion and contraction.

The flash reading, based on around 85 to 90 percent of a monthly purchasing managers' survey of the nation's private sector, is the earliest available indicator of the economy's operating climate.

An uptick in the preliminary PMI reading in April helps allay fears of the severity of a slowdown in China, economists remarked.

The bouncing "suggests that the earlier easing measures have started to work and hence should ease concerns of a sharp growth slowdown," Qu Hongbin, chief economist at HSBC in Hong Kong, said yesterday.

The reading would help strengthen the belief of a turning point in March, and the economy "could trough in the first quarter and might be on the upturn of the cycle," Lu Ting, Hong Kong-based China economist with Bank of America-Merrill Lynch, said yesterday.

Lu also said the official PMI reading, focused on mostly big manufacturers, is expected to remain stronger than the HSBC reading, as small and medium-sized enterprises could still be troubled by tightened liquidity.

The official PMI is likely to remain above 51, Lu predicted.

The official reading rose to 53.1 in March from 51 in February, while the HSBC reading hit a four-month low of 48.3 in March as well.

But there remain concerns over the recovery despite the improving data.

HSBC's Qu noted "the pace of both output and demand growth remains at a low level in a historical context and the job market is under pressure," which "calls for additional easing measures in the coming months."


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