PMI issued by the China Federation of Logistics and Purchasing rose to 55.2 in Oct, highest since April ‘08
Reuters 02 November 2009
(BEIJING) China’s vast manufacturing sector expanded in October at the fastest rate in 18 months, a survey showed yesterday, and economists said they expected the momentum to be sustained in the coming months.
The purchasing managers’ index (PMI) issued by the China Federation of Logistics and Purchasing (CFLP) rose to 55.2 last month, the highest level since April 2008, from 54.3 in September.
It was the eighth month in a row that the official PMI has stood above the boom-bust line of 50. The index, which is designed to provide a timely snapshot of business conditions in the industry, slumped as low as 38.8 last November as the global financial crisis raged.
Zhang Liqun, a researcher with the Development Research Center, a think-tank under the State Council, China’s cabinet, said the report showed the economy was now firmly on the recovery track.
In a comment for the logistics federation, Mr. Zhang said that gains in the sub-indexes for imports and new export orders reflected growing demand both at home and abroad.
‘All these show that economic growth will accelerate in the future, and the growth rate in the fourth quarter is likely to be 9.5 percent,’ he said.
Annual gross domestic product growth accelerated to 8.9 per cent in the third quarter from 7.9 per cent in the second.
The report was not universally strong. Growth in employment slowed, inventories of finished goods fell and input price inflation eased.
But Jing Ulrich, chairman of China equities and commodities at JP Morgan, agreed that the survey - especially the forward-looking components - suggested sustained expansion in industry.
‘While public investment may moderate in the months ahead, private real estate investment, consumer spending and export demand should drive growth in the coming months,’ she said in a note to clients.
Ms. Ulrich singled out a revival in property construction as developers replenish housing inventories.
New starts rose 56 per cent in September from a year earlier.
Construction - infrastructure as well as property - accounts for a large chink of China’s demand for materials, including 52 per cent of steel consumption, which grew 44 per cent in September from a year earlier, she noted.
Like other countries, China has started to debate the timetable for a gradual withdrawal of the monetary and fiscal stimulus it injected to support the economy through the crisis.
The government is almost half-way through a four trillion yuan (S$819.35 billion) pump-priming programme, while the country’s mainly state-owned banks have increased their loan books by a third over the past year. In the first nine months of the year they lent a whopping 8.67 trillion yuan. Ms. Ulrich, voicing the consensus view, said a broad-based macroeconomic tightening was unlikely over the rest of 2009.
‘Until greater inflationary pressure and a sustained recovery in exports become apparent, pro-growth economic policies are expected to remain in place.
‘Messages from the authorities suggest that they are not planning to withdraw stimulus measures in the near term, although the government is clearly fine-tuning policies for sectors that are prone to overcapacity,’ she said.
Meanwhile, China’s exports face a ‘hard and tortuous’ path to recovery as uncertainties dog the global economy’s gradual return to health, with this year’s trade surplus set to shrink from last year’s record, the Commerce Ministry said.
Commerce Minister Chen Deming told a conference on Saturday that China’s trade surplus was expected to fall to US$180 billion to US$190 billion this year from last year’s record US$295.5 billion. The surplus was US$136.4 billion in the first nine months of the year.
With China’s economic recovery relying heavily on government spending to boost domestic demand, imports have seen greater improvement than exports in recent months.
Exports in September were 15.2 per cent below their level a year earlier, beating forecasts of a 21 percent fall, although the government expects a double-digit fall for all of 2009.
In a statement released late on Friday on the ministry’s website (www.mofcom.gov.cn), it said that the full-year fall in exports compared with the previous year should be less than 20 per cent.
‘In 2010, the world economy will hopefully see a gradual recovery, and the environment for Chinese trade will gradually improve,’ it said. ‘But as there is not yet sufficient strength in the global economic recovery, many problems and contradictions have yet to be basically resolved. The recovery will be hard and tortuous, and it will be hard to see an obvious recovery in international demand in the short term.’
Net exports shaved 3.6 percentage points off headline GDP growth of 8.9 per cent in the third quarter as Chinese manufacturers continued to reel from a slump in global trade.
Protectionism in these straightened times was a particular worry, as was increasing competition, the ministry said.
‘At present, some nations are conducting probes into Chinese goods, which is causing yet further obstruction for a recovery in Chinese exports,’ it said.
A US trade panel on Friday approved the eighth government investigation this year into charges of unfair Chinese pricing practices in a case in which US companies want a nearly 100 per cent duty or more on US$382 million of imported steel pipes.
Still, there were signs for optimism, the ministry added.
The government was continuing to provide help to exporters in the form of export tax rebates, and numerous new markets awaited Chinese firms. ‘There is a bright future for developing trade with newly emerging markets,’ it said. -- Reuters
2 comments:
Manufacturing growth rate at 18-mth high
PMI issued by the China Federation of Logistics and Purchasing rose to 55.2 in Oct, highest since April ‘08
Reuters
02 November 2009
(BEIJING) China’s vast manufacturing sector expanded in October at the fastest rate in 18 months, a survey showed yesterday, and economists said they expected the momentum to be sustained in the coming months.
The purchasing managers’ index (PMI) issued by the China Federation of Logistics and Purchasing (CFLP) rose to 55.2 last month, the highest level since April 2008, from 54.3 in September.
It was the eighth month in a row that the official PMI has stood above the boom-bust line of 50. The index, which is designed to provide a timely snapshot of business conditions in the industry, slumped as low as 38.8 last November as the global financial crisis raged.
Zhang Liqun, a researcher with the Development Research Center, a think-tank under the State Council, China’s cabinet, said the report showed the economy was now firmly on the recovery track.
In a comment for the logistics federation, Mr. Zhang said that gains in the sub-indexes for imports and new export orders reflected growing demand both at home and abroad.
‘All these show that economic growth will accelerate in the future, and the growth rate in the fourth quarter is likely to be 9.5 percent,’ he said.
Annual gross domestic product growth accelerated to 8.9 per cent in the third quarter from 7.9 per cent in the second.
The report was not universally strong. Growth in employment slowed, inventories of finished goods fell and input price inflation eased.
But Jing Ulrich, chairman of China equities and commodities at JP Morgan, agreed that the survey - especially the forward-looking components - suggested sustained expansion in industry.
‘While public investment may moderate in the months ahead, private real estate investment, consumer spending and export demand should drive growth in the coming months,’ she said in a note to clients.
Ms. Ulrich singled out a revival in property construction as developers replenish housing inventories.
New starts rose 56 per cent in September from a year earlier.
Construction - infrastructure as well as property - accounts for a large chink of China’s demand for materials, including 52 per cent of steel consumption, which grew 44 per cent in September from a year earlier, she noted.
Like other countries, China has started to debate the timetable for a gradual withdrawal of the monetary and fiscal stimulus it injected to support the economy through the crisis.
The government is almost half-way through a four trillion yuan (S$819.35 billion) pump-priming programme, while the country’s mainly state-owned banks have increased their loan books by a third over the past year. In the first nine months of the year they lent a whopping 8.67 trillion yuan. Ms. Ulrich, voicing the consensus view, said a broad-based macroeconomic tightening was unlikely over the rest of 2009.
‘Until greater inflationary pressure and a sustained recovery in exports become apparent, pro-growth economic policies are expected to remain in place.
‘Messages from the authorities suggest that they are not planning to withdraw stimulus measures in the near term, although the government is clearly fine-tuning policies for sectors that are prone to overcapacity,’ she said.
Meanwhile, China’s exports face a ‘hard and tortuous’ path to recovery as uncertainties dog the global economy’s gradual return to health, with this year’s trade surplus set to shrink from last year’s record, the Commerce Ministry said.
Commerce Minister Chen Deming told a conference on Saturday that China’s trade surplus was expected to fall to US$180 billion to US$190 billion this year from last year’s record US$295.5 billion. The surplus was US$136.4 billion in the first nine months of the year.
With China’s economic recovery relying heavily on government spending to boost domestic demand, imports have seen greater improvement than exports in recent months.
Exports in September were 15.2 per cent below their level a year earlier, beating forecasts of a 21 percent fall, although the government expects a double-digit fall for all of 2009.
In a statement released late on Friday on the ministry’s website (www.mofcom.gov.cn), it said that the full-year fall in exports compared with the previous year should be less than 20 per cent.
‘In 2010, the world economy will hopefully see a gradual recovery, and the environment for Chinese trade will gradually improve,’ it said. ‘But as there is not yet sufficient strength in the global economic recovery, many problems and contradictions have yet to be basically resolved. The recovery will be hard and tortuous, and it will be hard to see an obvious recovery in international demand in the short term.’
Net exports shaved 3.6 percentage points off headline GDP growth of 8.9 per cent in the third quarter as Chinese manufacturers continued to reel from a slump in global trade.
Protectionism in these straightened times was a particular worry, as was increasing competition, the ministry said.
‘At present, some nations are conducting probes into Chinese goods, which is causing yet further obstruction for a recovery in Chinese exports,’ it said.
A US trade panel on Friday approved the eighth government investigation this year into charges of unfair Chinese pricing practices in a case in which US companies want a nearly 100 per cent duty or more on US$382 million of imported steel pipes.
Still, there were signs for optimism, the ministry added.
The government was continuing to provide help to exporters in the form of export tax rebates, and numerous new markets awaited Chinese firms. ‘There is a bright future for developing trade with newly emerging markets,’ it said. -- Reuters
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