HSBC China flash manufacturing PMI surged to a four-month high of 50.1 in August.
This beat expectations for a modest rise to 48.2. A reading below 50 shows contraction.
This is up from an 11-month low of 47.7 in July.
“China’s manufacturing growth has started to stabilise on the back of modest improvements of new business and output,” said HSBC chief economist for China, Hongbin Qu.
“This is mainly driven by the initial filtering-through of recent fine-tuning measures and companies’ restocking activities, despite the continuous external weakness. We expect further filtering-through, which is likely to deliver some upside surprises to China’s growth in the coming months.”
The sub-indices showed that new export orders contracted, and at a faster rate. Employment too decreased, although at a slower rate. Here’s the breakdown:
Here’s a look at the improvement in manufacturing PMI:
The official and HSBC PMI had been moving in different directions, with the official data showing an expansion in manufacturing.
With China’s Q2 GDP slowing to 7.5%, economists are watching every data point for signs of growth below 7.5% which Premier Li Keqiang said would be the growth floor for 2013.
The HSBC Flash PMI reflects the responses of 85 – 90% of those surveyed.