HSBC China Manufacturing PMI shows expansion in 6 months

The HSBC China Manufacturing PMI final reading for June rebounded to 50.7, up from 49.4 in May, and relatively unchanged from the flash reading.

July 01, 2014 11:10 IST | India Infoline News Service
Chinese manufacturers signalled the first improvement in overall operating conditions for six months in June.
Output rose for the first time since January, and at a moderate pace, according to HSBC China Manufacturing PMI.
Growth was supported by the strongest expansion of total new work since March 2013, while new export orders rose for the second month running. Increased volumes of new business led to the quickest depletion of stocks of finished goods for nearly three years, while job shedding was the weakest in three months.
After adjusting for seasonal factors, the HSBC Purchasing Managers Index (PMI) a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy posted at 50.7 in June, up from 49.4 in May, and signalled the first improvement in business conditions since last December.
The rate of improvement was only slight and weaker than the historical average. The improvement in the health of the sector partly reflected the first expansion of total new business placed at Chinese manufacturers for five months during June. Furthermore, it was the strongest rate of new order growth in 15 months. Reports from panellists suggested that improving market conditions boosted sales in the latest survey period.
New export business also rose in June, albeit at a marginal pace that was weaker than Mays 49-month high.
Increased volumes of new work led to the first expansion of output since January. The rate of growth was also the quickest since last November.
June data signalled renewed capacity pressures at Chinese manufacturers, with backlogs of work rising for the first time in five months. That said, the rate of increase was only slight. Anecdotal evidence suggested that unfinished business rose due to increased amounts of new work. Consequently, stocks of finished goods declined at a moderate pace that was the fastest since September 2011. Staffing levels meanwhile declined for
the eighth successive month in June. However, the pace of reduction eased to a modest pace that was the second-weakest in 2014 so far.
Purchasing activity in Chinas manufacturing sector rose again in June, amid reports of higher production requirements. The rate of activity growth edged up to a modest pace that was the strongest in the year to date.
Average input costs increased for the first time since last December in June. That said, the rate of inflation was moderate and much weaker than the long-run series average.

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