Orders rise as Chinese economy strengthens
The Purchasing Managers' Index was at 51.0, the National Bureau of Statistics and China Federation of Logistics and Purchasing said on Sunday. That compared with July's 50.3 level. 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.
"It's becoming more clear that the economy is stabilising," Zhang Liqun, a researcher with the Development Research Centre, which advises China's cabinet, said. "Market expectations are improving and companies are adapting better to the changing environment."
The Shanghai Stock Exchange Composite Index rose 2 per cent last week, the biggest gain since March. The latest PMI figure is the highest since April last year.
A sub-index of new orders rose 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.
China's government in March set a 2013 growth goal of 7.5 per cent. It 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 China manufacturing PMI of 51.0 indicates expansion (readings above 50 signal growth). The August reading was a 16-month high, suggesting manufacturing activity is strengthening after a two-quarter slowdown — a positive sign for investors watching China-linked growth.
The new orders sub-index climbed to 52.4 from 50.6, which shows growing domestic demand. For investors, rising new orders typically signal improving sales prospects for manufacturers and potential momentum for companies tied to Chinese manufacturing activity.
A gauge of new export orders moved above the 50 expansion line for the first time since March, indicating exports are recovering. Global investors monitoring trade-sensitive sectors may see this as a sign that external demand for Chinese-made goods is picking up.
The article notes the output reading rose to 52.6 from 52.4, and a separate preliminary manufacturing index from HSBC and Markit showed its first expansion since April. These readings reinforce the view that production and activity are improving.
The Shanghai Stock Exchange Composite Index rose 2% last week, the biggest weekly gain since March, reflecting market optimism after the stronger PMI and related manufacturing data.
The report said the data bolstered confidence that the economy is responding to Premier Li Keqiang’s policies to support growth, even as authorities crack down on shadow banking. Officials and researchers view policy support as helping stabilise expectations and company performance.
China set a 2013 growth goal of 7.5% and an average 7% target through 2015. GDP rose 7.5% in the April–June quarter (from a year earlier), down from 7.7% in Q1 and extending a long run of sub-8% expansion. The stronger PMI suggests manufacturing may be contributing to stabilising growth toward those targets.
Based on the article’s coverage, investors should monitor upcoming PMI releases, export order trends, official policy signals from Beijing, and market reactions such as movements in the Shanghai Composite. These indicators will help assess whether the manufacturing recovery is sustained.
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