Tags: china | Manufacturing | beijing | pmi

China Manufacturing Gains Signal Fourth-Quarter Rebound

Thursday, 01 November 2012 08:24 AM EDT

China’s manufacturing expanded for the first time in three months, as output and new orders climbed, adding to signs growth in the world’s second-biggest economy is rebounding after a seven-quarter slowdown.

The Purchasing Managers’ Index climbed to 50.2 in October from 49.8 in September, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Thursday in Beijing. A separate survey from HSBC Holdings Plc and Markit Economics was at an eight-month high.

Shanghai’s benchmark stock index rose the most in three weeks as the reports add to evidence of a pickup in expansion this quarter after industrial production, exports and retail sales accelerated in September. The data may also reduce pressure on outgoing Premier Wen Jiabao to roll out more stimulus measures during a once-a-decade power handover that begins with a Communist Party congress next week.

“The worst is behind us already,” Joy Yang, chief Greater China economist at Mirae Asset Securities (HK) Ltd. in Hong Kong, said in an interview with Bloomberg Television. “Monetary policy has already done its job” and there’s “no way we will see another interest-rate cut because we think inflation is going to rebound.”

Elsewhere in Asia, October purchasing managers’ index readings from Taiwan and South Korea also improved, adding to evidence the worst of the declines in Asia-Pacific economies may be moderating. The HSBC Manufacturing PMI for Taiwan was at its highest since June while a similar gauge for South Korea rose after dropping the previous month.

Asian stocks fell as a forecast from Japan’s Panasonic Corp. of a loss 30 times bigger than analysts estimated overshadowed manufacturing improvements in the region’s economies. The MSCI Asia Pacific Index declined 0.3 percent at 12:07 p.m. in Tokyo.

The Shanghai Composite Index, China’s benchmark stock gauge, rose 1.8 percent as of the 11:30 a.m. local-time break, headed for the biggest gain since Oct. 9. The index lost 5.9 percent in 2012 up until Wednesday on concern the slowing economy will depress earnings growth.

China’s economy expanded 7.4 percent in the third quarter from a year earlier, the slowest pace in three years. Bank of America Corp. in Hong Kong, this week raised its estimate for fourth-quarter growth to 7.8 percent from 7.5 percent while Nomura Holdings Inc. projects a rebound to 8.4 percent.

New Orders

Forecasts for China’s official PMI ranged from 49.8 to 51.8, in a Bloomberg News survey of 30 economists that had a median estimate of 50.2. A reading above 50 indicates expansion. The index is based on responses from purchasing managers at 820 companies in 31 industries.

A gauge of output rose to 52.1, the highest since May, while an index of new orders rose above 50 for the first time in six months, the statement showed. New export orders contracted for the fifth month although at a slower rate.

HSBC’s survey showed manufacturing contracted at a slower pace in October. The final reading of the survey, which covers more than 430 companies and is weighted toward smaller businesses, was 49.5, up from 47.9 in September and a preliminary reading of 49.1 published last week.

Policy Easing

HSBC’s new orders gauge was at the second-highest level in 17 months while new export orders contracted for a sixth month, according to the statement.

The survey implies “China’s industrial activity continues to bottom out,” Qu Hongbin, chief China economist at HSBC in Hong Kong, said in a statement. “We expect a continuation of policy easing to further boost domestic demand and counterbalance the external weakness, leading to a gradual growth recovery in the coming quarters.”

Elsewhere in Asia today, Indonesia and Thailand will report inflation figures for October. In Europe, data from the Nationwide Building Society will show U.K. house prices in October rose from the previous month.

Initial jobless claims in the U.S. for the week ended Oct. 27 were 370,000, according to the median of 49 estimates in a Bloomberg survey.

The People’s Bank of China has paused from monetary easing after cutting interest rates in June and July amid concern that further relaxing policy will lead to rebounds in inflation and property prices. Mirae’s Yang estimates consumer-price gains will accelerate to about 3 percent by the end of the year from 1.9 percent in September.

Faster Gains

Industrial-production growth accelerated for the first time in four months in September, retail sales rose at the fastest pace since March and fixed-asset investment expansion quickened.

“Macro data will continue to surprise on the upside in coming months as the government continues to ease policy through the period of leadership transition,” said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.

Gains in industrial output will be faster this quarter than in the previous three months and help the nation achieve its 7.5 percent target for economic expansion in 2012, Zhu Hongren, spokesman at the industry ministry, said at a briefing on Oct. 25.

Industrial companies’ profits rose in September for the first time in six months, a statistics bureau report showed on Oct. 27, a sign that pressures on corporate earnings are easing.

CSR Corp., China’s biggest trainmaker by market value, on Oct. 25 reported a 21 percent increase in third-quarter profit as rising domestic spending on railways and lower borrowing costs boosted income.

© Copyright 2024 Bloomberg News. All rights reserved.

China s manufacturing expanded for the first time in three months, as output and new orders climbed, adding to signs growth in the world s second-biggest economy is rebounding after a seven-quarter slowdown.The Purchasing Managers Index climbed to 50.2 in October from 49.8...
Thursday, 01 November 2012 08:24 AM
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