Monday, April 23, 2012

Manufacturing in China Shows Signs of a Rebound

Manufacturing in China Shows Signs of a Rebound

Published: April 23, 2012
New York Times

HONG KONG — A closely-watched survey of manufacturing activity in China rebounded in April, offering the latest sign that the Chinese economy is gradually regaining some of the momentum it lost last year.

The monthly survey, which is compiled by Markit and sponsored by HSBC, found that although conditions at factories remained difficult, government efforts to reinvigorate flagging economic growth over the past few months have filtered through to companies.

The reading for April, released on Monday, came in at 49.1, falling below the level of 50 that separates expansion and contraction for the sixth month in a row.

But it recovered markedly from the 48.3 points recorded in March.

This underpinned the view held by many analysts that the Chinese economy is on course for a gradual slowdown, rather than a sharp collapse, this year — if, as is widely expected, the authorities take more steps to bolster growth in coming months.

The once red-hot pace of growth in China slowed last year as weaker demand from the debt-laden euro zone and sluggish growth in the U.S. economy combined with tightening measures by Beijing aimed at combating inflation to take their toll.

Beijing has eased off the brakes in recent months, however, permitting banks once again to extend more loans to businesses, and policymakers now have room to deliver more support to the economy.

The rise in the April purchasing managers’ index “suggests that the earlier easing measures have started to work and hence should ease concerns of a sharp growth slowdown,” commented Qu Hongbin, China economist at HSBC, in a note accompanying the release on Monday.

“That said, the pace of both output and demand growth remains at a low level in an historical context and the job market is under pressure,” he noted. This, he added, meant the authorities were likely to speed up monetary and fiscal easing in the second quarter of 2012.

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