China factory ac­tiv­ity gath­ers steam in July

Kuwait Times - - BUSINESS -

China’s man­u­fac­tur­ing ac­tiv­ity in­creased last month as both pro­duc­tion and new or­der rates grew rapidly, in­de­pen­dent fig­ures showed yes­ter­day, but an­a­lysts warned the econ­omy still faces head­winds from pol­icy tight­en­ing.

The Caixin Pur­chas­ing Man­ager’s In­dex-an in­di­ca­tor of con­di­tions at small man­u­fac­tur­erscame in at 51.1 in the month, up from 50.4 in June as it marked a four-month high in July.

A PMI fig­ure above 50 rep­re­sents growth while any­thing be­low points to con­trac­tion. Re­cent fig­ures show steady ex­pan­sion in the world’s sec­ond largest econ­omy, which reg­is­tered an ex­pec­ta­tion-beat­ing 6.9 per­cent growth in the first half of the year, but ex­perts warn of a slow­down as reg­u­la­tors look to adopt stricter fi­nan­cial con­trols aimed at re­duc­ing the coun­try’s ex­ces­sive lever­age.

“Op­er­at­ing con­di­tions in the man­u­fac­tur­ing sec­tor im­proved fur­ther in July, sug­gest­ing the econ­omy’s growth mo­men­tum will be sus­tained,” Caixin an­a­lyst Zheng­sheng Zhong said in a joint state­ment with data com­piler IHS Markit. “That said, it’s un­likely that fi­nan­cial reg­u­la­tory tight­en­ing will be relaxed.”

Other an­a­lysts shed doubt on whether growth could be sus­tained. “Stronger for­eign de­mand helped drive a pick-up in new or­ders,” Ju­lian Evans-Pritchard of Cap­i­tal Eco­nomics said in a note, adding that out­put and price in­dices also rose while em­ploy­ment edged down.

“We don’t think this pick-up is sus­tain­able, how­ever, given the in­creas­ing head­winds from pol­icy tight­en­ing and we still ex­pect growth to slow dur­ing the sec­ond half of this year.”

The Caixin data con­trasts with the gov­ern­ment’s of­fi­cial pur­chas­ing man­agers’ in­dex (PMI) read­ing Mon­day, which sug­gested factory ac­tiv­ity ex­pan­sion slowed in July. The of­fi­cial PMI skews more to­wards big firms and state-owned com­pa­nies, while the Caixin in­dex in­cludes more pri­vate small and medium size com­pa­nies and is con­sid­ered by some an­a­lysts as more rep­re­sen­ta­tive of the health of China’s econ­omy. Evan­sPritchard added that even given the dif­fer­ent fo­cus of the two indexes, “it’s not clear why the PMIs moved in op­po­site di­rec­tions”. —AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.