Wednesday, October 24, 2012

China's Purchasing Managers Index Makes Modest Improvement



Published on Oct 24, 2012 by
China's manufacturers continue to see growth shrinking this month. In a report, the China HSBC Flash Manufacturing Purchasing Managers Index, or PMI, did rise to a three month high of 49.1 this month... up from 47.9 in September.

A PMI higher than 50 means that manufacturing is expanding; lower than 50 means it's contracting. PMI is often used as a sign of the general health of the economy.

The two biggest parts of the PMI are the headline index, which is an inflation indicator, and new orders and output.

In a statement, HSBC Chief Economist for China at HSBC, Hongbin Qu, said, "October's flash PMI reading continues to recover for the second month, thanks in part to a gradual improvement in the new orders index which picked up to a six-month high (albeit marginally below 50). This is helped by the filtering-through of the earlier easing measures. However, external challenges still abound and the pressures on the job market are lingering."

The new data is the newest indicator of the state of China's economy since data from authorities showed the country's gross domestic product falling behind the target in the third quarter.

Although the numbers are slightly up, with a PMI under 50, it indicates that there's still a long road ahead before expansion makes a more meaningful comeback.

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