China's
manufacturing sector returns to growth,
data show
By
Chris
Oliver, MarketWatch
Last update: 5:39 a.m. EDT May 4, 2009
HONG KONG (MarketWatch) -- China's
manufacturers increased output and hired
more workers in response to a spike in
new orders and declining inventories, a
report said.
The report marked the first growth in nine
months, potentially signaling a turning point in
the global economic crisis, according to data
released Monday by a Hong Kong brokerage.
The CLSA China Manufacturing PMI rose to 50.1 in
April from 44.8 in March. The April figure marks
the fifth straight month of gains, but is the
first time since July that the index has risen
above the 50 level, which indicates expansionary
conditions.
The data were roughly in line with the findings of
the China Federation of Logistics and Purchasing's
PMI, released Friday, which also indicated China's
manufacturing sector grew last month.
"The global manufacturing cycle appears to be
gaining momentum," wrote SocGen analyst David
Yen in a note Monday.
Most of the 11 subcategories showed improvement in
the manufacturing environment, apart from output
and input prices, both of which weakened.
Subindexes tracking growth in orders were up
significantly, with new orders rising to 56.3 from
a reading of 49.4 while new export orders came in
at 51.3, up from a reading of 43.9 in March.
"China's government has been extremely
successful in stimulating investment, and combined
with a sharp improvement in export orders, this
has pushed the PMI back into positive
territory," wrote CLSA's head of economic
research, Eric Fishwick.
Faced with stiff competition, manufacturers
continued to cut prices, sending the overall price
gauge for finished goods lower for an eighth
month. Input prices also fell, marking the seventh
straight month of declines.
The CLSA data are compiled from a survey of 400
companies.
Friday's PMI, released jointly by the National
Bureau of Statistics and the manufacturers'
federation, came in at 53.5 in April, up from
March's 52.4 reading, indicating expansionary
conditions for a second month.
The accuracy of the two PMIs was questioned last
month because they gave divergent views on the
economy's direction.
Some analysts said the federation's PMI reflected
a greater weighting toward state-owned
enterprises, was a better indicator of the
conditions in enterprises that were benefiting
from the government's stimulus plan.
The CLSA survey indicated conditions were still
contracting in March.
Chris Oliver is MarketWatch's
Asia bureau chief, based in Hong Kong.
