China manufacturing gauge picks up in September


China’s manufacturing sector saw a surprise pick-up in September, a closely watched survey showed Tuesday (September 23), providing some respite after a string of weak data pointing to a slowdown in world’s second-latest economy.

China’s manufacturing sector saw a surprise pick-up in September, a closely watched survey showed Tuesday (Sep 23), but economists warned a slowdown in the key property sector was an ongoing risk to growth.

HSBC’s preliminary purchasing managers index (PMI) hit a two-month high of 50.5, better than a final reading of 50.2 in August and providing some respite as indicators point to a slowdown in world’s second-largest economy. A reading above 50 indicates expansion.

Concerns over China’s economy – a key driver of global growth – have intensified following a string of lacklustre recent data, with economists calling for authorities to take further action to kickstart growth.

Qu Hongbin, HSBC’s chief economist for China, said that while the result indicated manufacturing sector activity was stabilising this month, expansion was still modest. “The property downturn remains the biggest downside risk to growth,” he said in the statement. “We continue to expect more monetary easing from the PBoC (People’s Bank of China) in order to steady the recovery,” he added.

Since April, Chinese authorities have introduced various stimulus measures, including small business tax breaks, targeted infrastructure spending and incentives to spur lending in rural areas and to small companies.

And last week reports said the PBoC would pump $81 billion into the country’s top five banks to spur lending.



Economists, however, have warned that the effect of stimulus measures introduced since April is waning and worry that a slowdown in the crucial property sector, where new home prices have fallen for four straight months, could derail any rebound.

On Tuesday, the Shanghai Securities News reported that China’s big four lenders will relax mortgage loan requirements, citing one of the banks. It added that people who had paid off previous mortgage loans would be treated as first-time buyers and enjoy preferential policies.

“If this is true, it constitutes a clear credit easing measure for the property sector,” economist Hua Changchun and colleagues at Nomura wrote in a reaction to the news report.

Earlier this month, the government said industrial production growth slowed sharply in August to its lowest level for more than five years, while expansion in retail sales and fixed asset investment also weakened.

Julian Evans-Pritchard, China economist at Capital Economics, said that while the PMI result indicated manufacturing had been boosted by demand for exports, the economy still had hurdles to surmount, property in particular. “Policymakers have remained relatively calm in the face of this quarter’s slowdown,” he wrote in a comment on the PMI. “Despite all the fuss over the recent liquidity injections by the People’s Bank, there has been no significant monetary easing.”

Finance Minister Lou Jiwei said at a weekend meeting that authorities would not make any significant policy adjustments even though downward pressure on economic growth remains, according to a government statement.

Earlier this month Premier Li Keqiang, at a World Economic Forum meeting in China, called for taking a long-term and comprehensive approach to managing the economy, suggesting the government was not overly concerned.

China’s economy grew a higher-than-expected 7.5 per cent in the second quarter, up from 7.4 per cent in the previous three months, which was the worst since a similar 7.4 per cent expansion in July-September 2012. Beijing is targeting expansion of about 7.5 per cent this year, the same as last year’s objective, as it tries to pull off a delicate transformation of the country’s growth model whereby consumer spending becomes the main driver rather than investment.

“We expect policymakers to stick with their current approach of using targeted support measures to prevent too rapid a deceleration in growth while at the same time avoiding the type of broader stimulus that could aggravate credit risks,” Evans-Pritchard wrote.

The PMI index is compiled by information services provider Markit and released by HSBC, which said the final result for September would be announced next Tuesday.

China releases its own official PMI at the beginning of each month. That indicator came in at 51.1 in August, down from 51.7 in July.






Sourcing : Channel News Asia | September 23, 2014

Thomas D’Innocenzi


About thomasdinnocenzi

Thomas D'Innocenzi is a highly accomplished, results-focused senior international executive with extensive experience in global sourcing and market development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global sourcing operations worldwide. Extensive experience in international market development operations to accommodate rapid growth. Skilled in building top-performing teams, benchmarking performance, and restricting organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. As principal of Nova Advisors, LLC I’ve assembled an exemplary team that brings with them the knowledge and experience gained from starting up a Global Sourcing program with multiple Fortune 500 companies as well as the largest supplier network throughout the Asia-Pacific region. We have experience and expertise in more than a thousand medical and pharmaceutical products in manufacturing and sourcing at the best value. The right product, the right price point and the right branding fueled these successes that resulted in double-digit growth for top line sales and bottom line net margins for our customers. What sets us apart: • Our reach includes a large network of suppliers & manufacturers spanning 13 countries in Asia-Pacific region • We understand the manufacturing process and the business of the supplier and the buyer • Our company culture is based on quality assurance and our process is based on local quality control Our commitment is to be your partner offering the best products and services at the lowest cost. Contact me to discuss how we can make the global marketplace work for you. In addition, I am open to discussing opportunities in global sourcing, international marketing & sales, logistics and medical/pharma in Thailand, Vietnam, Malaysia, Philippines & Japan. Aside from my work I enjoy piano, astronomy, physics, and assisting my daughters with their studies. SPECIALTIES: Global Sourcing, Supply Chain Management, Business Development, Marketing, Logistics, Global Networking, Market Development, Healthcare Solutions, Pharmaceuticals, Medical Devices, Technology, Asia, Southeast Asia, US and Canada
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