China’s manufacturing contracts again

17  January 2013

BEIJING — China’s manufacturing activity continued to contract in September but the rate of deterioration eased slightly than in the previous month, official data showed Monday.

The official purchasing managers’ index, released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, improved to 49.8 percent last month from 49.2 percent in August. However, it remained below the 50-percent threshold that divides expansion from contraction.

The September index ended the manufacturing PMI’s continuous decline for four straight months. The index fell below the boom-bust line in August for the first time since November 2011.

“The rebound in September confirms a trend that China’s economy is bottoming out,” said Zhang Liqun, an analyst with the Development Research Center of the State Council, a government think tank.

Judging by the reading of sub-indices, Zhang said there will be a turnaround for the downward movement in the world’s second-largest economy, and growth may pick up in the coming months.

China’s official PMI figures followed the final reading of a privately-compiled survey by the HSBC on Sept 29, which put the September PMI for Chinese manufacturers at 47.9 percent, up from 47.6 percent in August.

Sub-index for new orders climbed 1.1 percentage points from August to 49.8 percent last month, while new export orders rose sharply to 48.8 percent, up 2.2 percentage points from August. The output sub-index for September stood at 51.3 percent, up 0.4 percentage point from the previous month.

Improvements in the overall factory activity and PMI sub-indices mean the country’s pro-growth measures are starting to take effect, which will lay a good foundation for the fourth-quarter growth, said Cai Jin, CFLP vice-chairman.

The country’s economy rose 7.6 percent in the second quarter of the year, the slowest rate in more than three years after the global financial crisis.

To buoy the slowing economy, the Chinese government has rolled out an array of measures this year, including two cuts to benchmark interest rates, the easing of bank reserve requirements and the approval of infrastructure projects worth more than one trillion yuan ($157.73 billion).

Gross domestic product figures for the third quarter are scheduled to be released on Oct 18.