Chinese manufacturing figures ease fears of slowdown

Chinese manufacturing figures ease fears of slowdown


China Daily quoted analyst said manufacturing in China rebounded in August easing fears of a steep correction to the economy.

The China Federation of Logistics and Purchasing said the Purchasing Managers Index a major indicator of economic activity rose to 51.7% in August up by 0.5 percentage points from the July figure and reversed a three-month fall in the growth rate. 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% in the second quarter from a previous estimate of 2.4% 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.

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

Mr Zhang Liqun a researcher at the State Council Development and Research Center said he believed the PMI rebound indicated that China economy was not likely to see a steep correction. He said that "But attention should be paid to the big rebound in the Input Price Index which might increase pressure on companies' costs."

The IPI jumped 10.1 points last month to 60.5.

Mr Peter Redward head of Emerging Asia Research at Barclays Capital said "Overall, the leading indicators in August point to some near term strength in manufacturing activity and a rebound in input cost pressures. He said that looking ahead we expect a further pickup in the headline PMI in September before moderating in October."

However, Mr Lu Zhengwei chief economist of Industrial Bank said he believed the rebound was largely due to seasonal factors. He said that without seasonal factors, the rebound is quite weak and should not be regarded as a signal for economic recovery.

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

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