Manufacturing in China weak, smaller factories’ output declining

The official China PMI, released yesterday, showed the
sector creeping back into growth territory.

The PMI – which concentrates on larger, state-owned firms –
gave an overall result of 50.1. This was slightly better than a Wall Street
Journal poll of nine economists, who predicted a median score of 49.8.

Any result over 50 in the PMI survey indicates growth.

Bloomberg reports that the improvement was assisted by USA
demand and two interest rate cuts in the country, which is experiencing a
general slowing in its economy.

The result was treated with caution, as the larger,
government-owned firms surveyed were more likely to have benefited from
stimulatory moves by the government.

Overall, things were weak, said

“In March, there’s always a pick-up after Chinese New Year,
but this year it’s weaker than the seasonal pattern,” Business Spectator reports Mizuho economist Shen Jianguang as saying.

“For all companies, profit growth has declined. The slowing
trend is clear. It’s a more difficult environment, with orders slowing and a
lower order book.”

The HSBC PMI, concentrating on smaller, private enterprises,
was in contraction territory, at 49.6 (down from February’s 50.7).

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