Growth in Chi­nese man­u­fac­tur­ing sec­tor picks up pace in July

The Star Early Edition - - BUSINESS REPORT INTERNATIONAL - Elias Glenn

GROWTH in China’s man­u­fac­tur­ing sec­tor quick­ened last month, a pri­vate sur­vey showed yes­ter­day, as out­put and new or­ders rose at the fastest pace since Fe­bru­ary on strong ex­port sales.

But even as firms boosted pur­chas­ing in an­tic­i­pa­tion of more busi­ness, em­ploy­ment lev­els at fac­to­ries fell at the fastest pace in 10 months and a read­ing on busi­ness out­look was the low­est since last Au­gust – a sign that eco­nomic mo­men­tum may start to ebb in the months ahead.

The Caixin/Markit Man­u­fac­tur­ing Pur­chas­ing Man­agers’ In­dex (PMI) rose to 51.1 points in July, above the 50 point mark that sep­a­rates growth from con­trac­tion, and well ahead of the 50.4 points in June, which was the me­dian fig­ure fore­cast by 21 an­a­lysts.

A resur­gent ex­port sec­tor, un­der­pinned by a bright­en­ing global econ­omy, helped China to post sur­pris­ingly strong gross do­mes­tic prod­uct growth of 6.9 per­cent in the first half of the year.

The Caixin read­ings di­verged from an of­fi­cial PMI sur­vey re­leased on Mon­day that showed that growth in China’s man­u­fac­tur­ing sec­tor cooled slightly last month, with ex­port de­mand slack­en­ing.

Di­ver­gence in the two indexes is usu­ally a re­sult of the Caixin PMI’s smaller sam­ple size rather than any­thing fun­da­men­tal to China’s econ­omy, said Jonas Short, who heads the Bei­jing of­fice at in­vest­ment bank Sun Hung Kai Fi­nan­cial.

The Caixin new ex­port or­ders read­ing came in at 53.5 points in July, up from

The Pur­chas­ing Man­agers’ In­dex rose to 51.1 points in July, well ahead of the 50.4 points in June

50.9 points in June and the high­est since Fe­bru­ary.

De­spite mixed sig­nals, an­a­lysts are still gen­er­ally op­ti­mistic about the out­look for China’s ex­ports, even if there was a slight dip in July.

Al­though China’s for­eign trade faces a mostly pos­i­tive en­vi­ron­ment in the sec­ond half of the year, un­cer­tain­ties ex­ist, vice com­merce min­is­ter Qian Kem­ing said on Mon­day.

The US and China failed ear­lier this month to agree on ma­jor new steps to re­duce the US trade deficit with China, cast­ing doubt over Pres­i­dent Don­ald Trump’s eco­nomic and se­cu­rity re­la­tions with Bei­jing.

The broader con­sen­sus among China watch­ers is that eco­nomic growth will cool in com­ing months as a gov­ern­ment crack­down on fi­nan­cial risks raises bor­row­ing costs, squeez­ing prof­its and out­put. But there ap­pears to be more than enough mo­men­tum to reach Bei­jing’s growth tar­get of about 6.5 per­cent for the year.

Chi­nese goods pro­duc­ers last month were able to raise out­put prices the most since March, yes­ter­day’s PMI showed, as in­put in­fla­tion also ac­cel­er­ated, al­though the price gains were much milder than those seen at the turn of the year. Com­pa­nies still ex­pected to in­crease out­put over the next 12 months, but the read­ing was the low­est since Au­gust. – Reuters


A worker as­sem­bles a ship­ping con­tainer at a factory in Qi­dong, China. Al­though firms boosted pur­chas­ing or­ders, em­ploy­ment lev­els at fac­to­ries fell in July.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.