China August official PMI seen hitting three-month high

Tue Aug 27, 2013 3:19am EDT
 
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BEIJING (Reuters) - China's factory activity in August may have expanded at the fastest pace in three months, a Reuters poll showed, adding to evidence that the world's second-largest economy may be stabilizing after slowing for more than two years.

The median forecast of 12 economists polled by Reuters showed China's official manufacturing managers' index (PMI) in August may have risen to 50.6 from July's 50.3.

A reading above 50 indicates expanding activity while one below it points to a contraction.

Beijing has stepped up efforts in recent months to prevent a sharp economic slowdown by quickening railway investment and public housing construction and introducing a series of measures to help smaller companies, which could sustain the revival of internal demand in the coming months.

"PMI data for August could further confirm a stabilizing trend of the economy, which is mainly underpinned by infrastructure and property investment," said Nie Wen, an analyst at Hwabao Trust in Shanghai.

A similar, preliminary private sector survey of purchasing managers, sponsored by HSBC and published last week, showed activity in China's industrial sector grew at its quickest pace in four months in August as new orders surged.

The official PMI generally paints a rosier picture than the Markit/HSBC PMI, as it mainly covers big and state-backed companies, while the latter focuses more on smaller and private sector firms.

The anticipated uptick in the vast manufacturing sector could also have been boosted by rising domestic demand from inventory rebuilding after significant destocking in the second quarter, analysts said.

Data on Tuesday showed that industrial profits in July grew 11.6 percent in July from a year earlier, picking up from annual growth of 6.3 percent in June, further evidence of an improvement in corporate fortunes.   Continued...

 
A worker welds at a machinery manufacturing factory in Huaibei, Anhui province August 20, 2013. China's factory activity in August may have expanded at the fastest pace in three months, a Reuters poll showed, adding to evidence that the world's second-largest economy may be stabilising after slowing for more than two years. REUTERS/Stringer