Date 25 August 2010
Manufacturing in China rebounded in August, finishing a three-month fall since May 2010. It bolsters confidence that the country can prevent the world from a double-dip recession despite weaknesses in some smaller regional economies.
According to China Federation of Logistics and Purchasing, the Purchasing Managers' Index (PMI), a major indicator of economic activity, rose to 51.7 percent in August, up 0.5 percentage points from the July figure. A reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction. A separate PMI for China, from HSBC bank, rebounded to a three-month high of 51.9 from 49.4. The July number which was below 50 fueled the fear that the world’s biggest engine of growth would slow down, together with US growth dropped to 1.6 percent in the second quarter, from a previous estimate of 2.4 percent in July. The new number injects confidence into the world market.
The good news of China economy outweighed the declines in South Korea where the uncertain recovery of the West hurt the exporters. A research note from China Industrial Securities said the rebound showed domestic demand is playing an increasingly important role, with the nation relying less on foreign trade for growth. However, some economists regards the rebound as a weak signal for recovery, because of seasonal factors in PMI. They expect gross domestic product (GDP) growth to slow further, bottoming at 8 to 8.5 percent year-on-year in the fourth quarter as the impact of the property tightening becomes more apparent and export growth slows.
Source: China Federation of Logistics and Purchasing
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