HSBC: China begins to recover

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China's manufacturing industry stabilized in August with the help of new orders, according to the HSBC Flash China Manufacturing Purchasing Managers' Index (PMI) released Thursday.

The headline figure rose to a four-month high of 50.1, from 47. 7 in July. "China's manufacturing growth has started to stabilize on the back of modest improvements of new business and output. This is mainly driven by the initial filtering through of recent fine- tuning measures and companies' restocking activities, despite the continuous external weakness," said Qu Hongbin, chief economist for greater China and co-head of Asian Economic Research at HSBC.

The Flash PMI is based on a survey of purchasing executives in Chinese companies. An index figure above 50 signals expansion, while below 50 signals contraction.

"We expect further filtering through, which is likely to deliver some upside surprises to China's growth in the coming months," Qu added.

The Flash PMI is published on a monthly basis, approximately one week before final PMI data are released, making the HSBC PMI the earliest available indicator of manufacturing sector operating conditions in China. The final data of August is due on Sept. 2.

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