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April 24, 2014

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Manufacturing PMI stages slight rebound

CHINA’S manufacturing activity may have rebounded mildly in April as a preliminary survey reading improved to a two-month high.

The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of the industrial sector’s vitality, edged up to 48.3 in April from March’s final reading of 48, said HSBC Holdings Plc and research firm Markit yesterday.

The HSBC PMI is weighted toward private and export-oriented firms, and a reading below 50 means contraction. The latest figure reflected a fourth straight month of contraction.

Qu Hongbin, chief economist for China at HSBC, said production activity seemed to stabilize in April.

“The domestic demand showed mild improvement, and deflationary pressures eased,” Qu said.

The component indices showed new orders rose to 47.7 in April from 46.5 a month earlier, while production gained to 48 from 47.2, although both were below the growth threshold of 50. The new export orders fell to 49.3 from 51.3.

Zhu Haibin, chief economist for China at JPMorgan, said the flash reading showed China’s slowing economy likely has stabilized in the near term, though the pace of recovery in the second quarter will be rather modest.

The State Council, China’s Cabinet, has unveiled new measures, including lower reserve requirements for rural banks and speeding up railway construction, to support growth and employment after the first-quarter gross domestic product growth eased to 7.4 percent, the slowest in 18 months.

Zhang Zhiwei, an economist at Nomura, said in a note the survey results sent mixed messages.

“We do not believe this uptick in the HSBC Flash PMI signals any sort of a turning point for the economy,” Zhang said. “The growth momentum is on a downtrend, with the economic growth likely to slow to 7.1 percent in the second quarter.”

The official Purchasing Managers’ Index, slated toward state-owned manufacturers, rose to 50.3 in March from 50.2 in February, staging the first rebound in four months.

Sheng Laiyun, a spokesman for the National Bureau of Statistics, said earlier that China’s economy will be able to meet the 7.5 percent growth target this year.




 

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