BEIJING, Sept 2 China's factory activity
expanded for the first time in four months in August as domestic
demand rebounded, a private survey showed, a further sign that
policymakers may have averted a sharp slowdown in the world's
The final HSBC/Markit Purchasing Managers' Index (PMI)
climbed to 50.1 in August, up sharply from July's 47.7 and in
line with last week's flash reading.
The survey came a day after a more bullish official
manufacturing PMI, which showed factory activity expanded at the
fastest pace in more than a year in August with a jump in new
orders ( ).
The official PMI, which came in at 51.0 versus expectations
for 50.6, is more weighted towards bigger and state-owned firms,
which have easier access to credit and the scale to cope better
But any expectations for a strong rebound may be misplaced.
As a PMI reading above 50 indicates growth while one below 50
demarcates contraction, the latest Markit/HSBC data suggests
August's expansion was only modest.
Indeed, the survey showed new export orders dipping from
July to stay well below the 50-point threshold. New orders,
which include domestic orders, showed marginal growth by rising
to 50.8, albeit a four-month high.
"We expect some upside surprises to China's growth in the
coming months," said Qu Hongbin, an HSBC economist, noting that
factory activity had picked up on firms rebuilding their stocks
and on recent steps taken by authorities to boost activity.
Modest growth in China's factories should still comfort
financial markets, however, offering hope that a run of
encouraging data in July was not a fluke.
As recently as a month ago, investors had worried that
China's economy was slipping into a deeper-than-expected
downturn, especially after it was hit by an unprecedented cash
crunch in June.
HSBC said lethargic export sales remained an Achilles' heel
for China, with factories citing weak U.S. and European demand
behind last month's fall in overseas orders.
Yet a weak economic revival may have started to stir price
pressures. Average input costs rose in August for the first time
since February on the back of higher raw material prices, HSBC
To revive China's economy, which has slowed in 12 of the
last 14 quarters, the government has cut taxes for small firms
and accelerated investment in infrastructure and railways.
But analysts have warned investors against thinking that the
economy would make a roaring comeback, saying that 2013 growth
is likely to cool to around 7.5 percent, the worst in 23 years.
(Reporting by Koh Gui Qing; Editing by Kim Coghill)