China man­u­fac­tur­ing con­tin­ues re­bound

The Myanmar Times - - Business | International -

MAN­U­FAC­TUR­ING ac­tiv­ity in China con­tin­ued its re­bound in Septem­ber on im­prov­ing pro­duc­tion and de­mand – a pos­i­tive sign for the world’s sec­ond-largest econ­omy.

The of­fi­cial pur­chas­ing man­agers’ in­dex (PMI) came in at 50.4 for Septem­ber – ex­actly the same level as in Au­gust, which was its high­est since Oc­to­ber 2014 – fig­ures from the Na­tional Bureau of Sta­tis­tics (NBS) showed.

A fig­ure above 50 sig­nals ex­pand­ing ac­tiv­ity, while any­thing be­low demon­strates shrink­age. In­vestors closely watch the PMI read­ings, which gauge con­di­tions at Chi­nese fac­to­ries and mines, as the first in­di­ca­tor of the health of the econ­omy each month.

The Septem­ber fig­ure was up from July’s 49.9 and com­pared to the me­dian fore­cast of 50.5 in a Bloomberg News sur­vey.

Af­ter Au­gust’s un­ex­pected surge, some ex­perts had ex­pected a de­cel­er­a­tion.

But heavy rain and flood­ing in the south and cen­tre of the coun­try have fu­elled a surge in de­mand as re­con­struc­tion work gets un­der­way.

The man­u­fac­tur­ing sec­tor has also been sup­ported by a rise in the prop­erty mar­ket, with prices of new apart­ments up some 40 per­cent year-on-year in some cities and 25pc in Bei­jing, which boosts de­mand for con­struc­tion ma­te­ri­als, fur­ni­ture and ap­pli­ances.

China’s key man­u­fac­tur­ing sec­tor has been strug­gling in the face of sag­ging global de­mand for Chi­nese prod­ucts and ex­cess in­dus­trial ca­pac­ity left over from the coun­try’s in­fra­struc­ture boom.

But the new data adds to ev­i­dence of im­prove­ment as gov­ern­ment fis­cal sup­port and the soar­ing prop­erty mar­ket help un­der­pin growth.

Fresh signs of sta­bil­ity may lead pol­icy mak­ers to re­main on hold af­ter keep­ing their bench­mark rate at a record low for al­most a year.

“Thanks to heavy fis­cal stim­u­lus through [state owned en­ter­prise] in­vest­ments, pro­duc­tion re­lated to in­fra­struc­ture projects and the en­larg­ing cur­rent ac­count sur­plus, GDP growth could edge up to 6.9pc in Q3 and Q4, bring­ing the an­nual fig­ure to 6.8pc,” Ali­cia Gar­cia Her­rero, chief economist of Natixis Asia in Hong Kong, wrote in a re­cent re­port.

China is a vi­tal driver of global growth, but its econ­omy ex­panded only 6.9pc in 2015 – its weak­est rate in a quar­ter of a cen­tury – and has slowed fur­ther this year.

Bei­jing has said it wants to re­ori­ent the econ­omy away from one re­ly­ing on debt-fu­elled in­vest­ment and to­ward a con­sumer-driven model, but the tran­si­tion has proven chal­leng­ing. –

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