CHINA FACTORY GROWTH RISES IN AUGUST

Production, total new orders and business expectations shift into higher gear

BEIJING economy remains on solid footing for now, despite concerns that growth may begin to fade in coming months.

China’s resilience so far this year has surprised economists and given an extra boost to a global recovery despite its crackdown on riskier types of lending and ever-tougher curbs to get the overheated housing market under control.

The official Purchasing Managers’ Index (PMI) released yesterday rose to 51.7 last month, from the previous month’s 51.4, confounding economists’ expectations for a marginal decline.

Production, total new orders and business expectations all shifted into higher gear, while a separate industry survey showed activity in the steel sector expanded at the fastest pace since April last year, thanks to a yearlong, government-led construction boom.

In particular, a sharp pick-up in input prices bodes well for resource companies’ earnings and investment in coming months, said ANZ.

“The price-driven recovery will continue at least in the third quarter,” said Raymond Yeung, Greater China chief economist for ANZ in Hong Kong.

China’s economy grew a fasterthan-expected 6.9 per cent in the first half, with resurgent exports and robust retail sales adding to the momentum from the infrastructure building spree and record lending by state-controlled banks last year. Reuters