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China manufacturing figures suggest growth still on track

Chinese manufacturing index is based on a survey of purchasing managers from more than 820 companies in 20 industries

China’s manufacturing industry bounced back last month, suggesting the country’s growth is stabilising.

However, Beijing’s monetary policy tightening over the last year coupled with the debt crises in the eurozone and US have clouded the outlook. Chinese factories’ export orders declined last month for the first time since April 2009.

China’s purchasing managers’ index rebounded to 50.9 in August from a 28-month low of 50.7 in July, marking the first increase in five months, the China Federation of Logistics and Purchasing (CFLP) said on Thursday. A reading below 50 indicates contraction, while a reading above 50 suggests the sector is expanding.

Brent crude rose to a one-month high of 5.27 a barrel on the news.

Cai Jin, deputy chairman of the CFLP, said the index shows that China’s economic growth has remained stable. The manufacturing index is based on a survey of purchasing managers from more than 820 companies in 20 industries.

“The 0.2 percentage points growth in August PMI showed that the Chinese economic recovery is gradually stabilising,” said Zhang Liqun, a researcher with the Development Research Centre of the State Council, or China’s cabinet. But Zhang flagged up uncertainties: “The fairly big drop in the new export order index showed that Chinese exports may weaken significantly in the future.” He also cautioned that investment growth in infrastructure and the property sector could slow.

While the output sub-index rose by 0.2 points to 52.3, the new orders measure was unchanged from July at 51.1, and the export orders gauge fell to 48.3 from 50.4 – the first time it has contracted since April 2009. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds