International | Aug 23 2011
By Rudi Filapek-Vandyck
China's manufacturers continue operating under tough circumstances, but minor improvements seem to be on the cards. This is the straightforward conclusion to draw from HSBC's flash PMI indicator for the sector, released today.
At face value, the pre-liminary PMI which is basd upon 85-90% of survey results, indicates the sector is still contracting, but at a slowing rate. The Flash China Manufacturing PMI for August has generated a result of 49.8 (up from 49.3 in July), while the Flash China Manufacturing Output Index stands at 49.4 in August, compared to 48.0 in July. Typical for this index, 50 marks the difference between growth (above) and contraction (below).
Similarly, reports HSBC, new orders and new export orders remained below 50, but signaled a slowing pace of contraction (hence a small improvement in underlying dynamics).
The reponse of HSBC economists: "The flash manufacturing PMI reading picked up slightly to a level close to the break-even mark in August, which is still consistent with around 13% y-o-y IP growth. Despite the turmoil in global financial markets, the new exports orders index rose to a three-month high, albeit still marginally below 50. All these data suggest that the hard landing risk is still remote. This provides leeway for the PBoC to keep the current tightening measures in place."
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