September 3, 2010

China manufacturing, sales figures rebound

SHANGHAI, China

Chinese manufacturing and auto sales rebounded in August, suggesting the world’s second-biggest economy may not be slowing as quickly as feared.

Two surveys released Sept. 1 showed production, new orders and purchasing prices all rose in August, with the HSBC purchasing managers index — a seasonally adjusted index designed to measure the performance of the manufacturing economy — rising to its highest level in three months, at 51.9.

“This reconfirmed our long-held view that China is moderating rather than melting down,” Hongbin Qu, chief economist for China at HSBC, said in the report.

The China Federation of Logistics and Purchasing said its PMI rose to 51.7 in August from 51.2 in July. Numbers above 50 show manufacturing activity expanding, and the federation’s PMI readings have remained above 50 for 18 straight months.

China’s economic growth slowed to 10.3 per cent over a year earlier in the second quarter, down from its blistering 11.9 per cent first quarter pace. Many worry that the slowdown could weaken the global recovery if it cuts Chinese demand for imported iron ore, industrial machinery and other foreign goods.

But strong export demand, domestic consumption and investment are all still supporting steady growth, federation analyst Zhang Liqun said in its report. “The rise in the PMI for August shows that China’s economy will not suffer a serious correction,” Zhang said.

While the official manufacturing survey showed no signs of a major slowdown, the index was basically flat and “suggests manufacturing activity growth remains significantly below its trend level,” investment bank Goldman Sachs said in a report.

China has moved to counter the impact of global economic malaise, spending hundreds of billions of dollars on new construction and subsidizing purchases of appliances and vehicles to help spur demand.

Associated Press

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