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PMI may spring surprise rally in September
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CHINA’S manufacturing sector may rebound unexpectedly in September on firmer external demand, a survey showed yesterday.
The HSBC Flash China Manufacturing Purchasing Managers’ Index, the earliest available indicator of China’s industrial sector, rose to 50.5 for September from the final reading of 50.2 in August, according to HSBC and research firm Markit.
Although the figure for September grew only marginally, it marked a two-month high that surprised observers. A reading above 50 means expansion.
Chang Jian, an economist at Barclays, said the result of the HSBC Flash PMI, weighted toward private and export-oriented companies, defied expectations of an easing to 49.6. But the detailed readings still suggested potential risks, Chang said.
Qu Hongbin, chief economist for China at HSBC, said new orders and new export orders improved but employment fell further and disinflationary pressure intensified.
“Economic activity in the manufacturing sector showed signs of stabilization. But overall, the data still pointed to a modest expansion,” Qu said. “The property downturn remains the biggest downside risk to growth, and we continue to expect more monetary easing from the central bank in order to steady the recovery.”
The components showed that production was flat at 51.8, but employment conditions deteriorated, with the index falling to 46.9, the lowest since February 2009. Disinflationary pressure intensified, with both input and output prices falling faster.
“We expect the government to lower its 2015 growth target to 7 percent,” Chang said.
The activity indicators, including industrial output, fixed-asset investment and retail sales, weakened in July and August, sparking fears whether China could meet its 7.5 percent growth target for the year.
The government’s economic focus for the rest of this year would be to “put reform ahead of stimulus and accept that growth could come in below the 7.5 percent target.”
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