Upbeat China August flash HSBC PMI points to stabilizing growth

Wed Aug 21, 2013 10:51pm EDT
 
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By Kevin Yao

BEIJING (Reuters) - Activity in China's vast manufacturing sector hit a four-month high in August as new orders rebounded, a preliminary private survey showed on Thursday, reinforcing signs of stabilization in the world's second-largest economy.

The Flash HSBC Purchasing Managers' Index rose to 50.1 from July's final reading of 47.7, which was the weakest in 11 months, though it barely passed the watershed 50 line which demarcates expansion of activities from contraction.

The government has announced a series of targeted measures to support the slowing economy, including scrapping taxes for small firms, offering more help for ailing exporters and boosting investment in urban infrastructure and railways.

"It confirms that the economy has stabilized in the short term and downside risks for H2 have declined," said Zhiwei Zhang, China economist at Nomura in Hong Kong.

The Australian dollar jumped and Asian shares pared early losses after the PMI report but investors remained wary of negative fallout for Asia if the U.S. central bank begins to taper back its massive stimulus program as early as next month.

Copper rose and crude oil prices bounced off their early lows.

A sub-index measuring new orders rose to a four-month high of 50.5 in August from 46.6 in July. But the sub-index on new export orders edged lower in a reminder of weak global demand.

The employment sub-index of the flash PMI also picked up in August, but still hovered below the 50 watershed line.   Continued...

 
An employee works inside a silk factory in Neijiang, Sichuan province, July 3, 2013. REUTERS/China Daily