By Dow Jones Business News, September 29, 2013, 11:25:00 PM EDT
China's Manufacturing Sector Expands Slightly
BEIJING--A final reading of China's manufacturing activity in September showed a slight rise, mainly supported by
rising overseas demand, adding to evidence that the Chinese economy continues to recover, albeit at a more modest pace
than earlier data indicated.
The HSBC China Manufacturing Purchasing Managers' Index edged up to a final reading of 50.2 in September from 50.1 in
August, HSBC Holdings PLC said Monday.
However, while the above-50 reading indicates continued month-to-month expansion, the final gauge was lower than
HSBC's preliminary September PMI of 51.2 announced Sept. 23.
"The final reading is a little disappointing, but the overall trend [in recovery] remains unchanged," UBS economist
Wang Tao said. The drop in the final PMI figure from the initial estimate could reflect slowing economic growth in late
September, she said.
"Such a significant difference [between the two readings] shows that the momentum of economic recovery seen in July
and August may have stalled in September," said Goldman Sachs economist Song Yu. Growth rates in the third and fourth
quarter may be a little higher than the first two quarters but are unlikely to be a lot better, he added.
New business from overseas increased in September for the first time in six months, with surveyed enterprises citing
stronger demand from client bases in Europe and the U.S., the statement said. Increased new orders led to a modest
increase in purchasing activity at China's factories, while stocks of finished goods declined for the third successive
However, the reading signaled continued uncertainties around domestic demand. Electricity consumption was low early in
the month before picking up in middle of the month, said Ms. Wang. "We are still not sure about the situations at end of
HSBC's chief economist for China, Qu Hongbin, still called the reading positive, since it signaled further improvement
compared with an 11-month low in July.
"Though only slight, this was a positive development, said Mr. Qu. "Growth is bottoming out on Beijing's mini-
stimulus," he said. "We expect continuous policy efforts to sustain the recovery."
Following on-year economic growth of 7.5% in the second quarter, Beijing has used targeted "mini-stimulus' policies,
speeding up subway and rail projects while offering tax breaks and cutting red tape to help support economic growth.
The HSBC China Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing
executives in more than 420 manufacturing companies. A PMI reading above 50 indicates on-month expansion in
manufacturing activity and a reading below indicates contraction.
--Liyan Qi and Yajun Zhang contributed to this story.
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