Manufacturing News

China manufacturing improves in August

In August, activity in China's manufacturing sector expanded at the fastest pace in 16 months, according to the purchasing managers' index (PMI) survey.

Reuters reports that the PMI figure, published by the National Bureau of Statistics, rose to 51.0. This compared to the July figure of 50.3. It was the highest figure since last April.

A reading above 50 correlates with expansion, while a reading under 50 correlates with a contraction.

The result raises hopes that a rapid economic slowdown in the world's second-largest economy may have been arrested.

In an effort to avert such a slowdown, Beijing has increased investment in railway development and public housing construction. In addition, the government has increased efforts to help smaller companies.

"We are seeing clearer signs of economic conditions improving," said Haibin Zhu, chief China economist at JP Morgan in Hong Kong.

"One of the reasons is the lagging effect of credit growth earlier in the year, while the second is the recent shift in the policy stance and more concrete policy announcement."

According to the survey, there was also an increase in all sub-indices. This includes new orders and quantity of purchases to input prices and employment.

"The PMI figure showed evident recovery in August, suggesting the economy is further stabilising," Zhang Liqun, an economist at the Development Research Centre, said in a statement accompanying the PMI.

"The improvement in all sub-indices also showed market expectations are turning better and companies are adapting to the changing business environment."

Chinese officials now believe the annual GDP target of 7.5 percent is achievable. The government expected slower growth and has accepted it as it moves from an economy with an over-reliance on debt-financed construction and exports to one driven by domestic consumption.

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