Chinese output hits 16-month high: PMI
The purchasing managers' index was at 51.0, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Sunday in Beijing. That compared with July's 50.3. Readings above 50 indicate expansion.
The report bolsters confidence the economy is responding to Premier Li Keqiang's policies to support growth amid a crackdown on shadow banking aimed at curbing financial risks.
"It's becoming more clear that the economy is stabilising," Zhang Liqun, a researcher with the Development Research Centre, an agency advising China's cabinet, said in a statement.
The Shanghai Composite Index rose 2 per cent last week, the biggest gain since March. The latest PMI figure is the highest since April 2012.
A sub-index of new orders jumped to 52.4 from 50.6 the previous month, a gauge of new export orders rose above the 50 line that divides expansion from contraction for the first time since March, and an output reading rose to 52.6 from 52.4.
The preliminary reading of a separate manufacturing index released by HSBC and Markit Economics late last month showed the first expansion since April.
The Chinese government in March set a 2013 growth goal of 7.5 per cent and has a target for an average 7 per cent expansion through 2015. GDP increased 7.5 per cent in the April-to-June period from a year earlier, down from 7.7 per cent in the first quarter, extending the longest streak of sub-8 per cent expansion in at least two decades.
Frequently Asked Questions about this Article…
A purchasing managers' index (PMI) of 51.0 — reported by the National Bureau of Statistics and the China Federation of Logistics and Purchasing — means China's manufacturing sector is expanding (readings above 50 indicate expansion). For investors, a rising PMI signals improving factory activity and demand after a two‑quarter slowdown, which can boost economic confidence.
The PMI sub‑index for new orders jumped to 52.4 from 50.6, and the overall output reading rose to 52.6 from 52.4. Those moves show stronger demand and higher production levels month‑on‑month, which supports the view that manufacturing activity is picking up.
Yes. The PMI's gauge of new export orders rose above the 50 expansion line for the first time since March, indicating that external demand for Chinese manufactured goods was strengthening in the latest reading.
The Shanghai Composite Index rose 2% last week — the biggest weekly gain since March — a reaction consistent with investors responding positively to the higher PMI and improved growth signals.
A preliminary manufacturing index from HSBC and Markit Economics also showed the first expansion since April, which aligns with the National Bureau of Statistics' PMI and reinforces the view that manufacturing activity is recovering.
The report bolsters confidence that the economy is responding to Premier Li Keqiang's policies to support growth. That improvement comes alongside a crackdown on shadow banking aimed at curbing financial risks, suggesting policymakers are trying to balance growth support with financial stability.
The Chinese government set a 2013 growth goal of 7.5% and an average 7% expansion target through 2015. GDP rose 7.5% in the April‑to‑June period (down from 7.7% in Q1). The higher PMI is consistent with a stabilising economy that can help China work toward those targets.
PMI readings are timely indicators of manufacturing activity and demand — useful alongside GDP figures, policy signals and other surveys (like HSBC/Markit). Treat PMI as one important data point that signals whether growth is stabilising, rather than the sole basis for investment decisions.
Call 1300 880 160
Start a chat
Schedule a call
