TG: Chinese economy bounces back with first manufacturing growth in six months
HSBC/Markit manufacturing PMI shows factory output increased in June, the first expansion since December
Activity in China's factory sector expanded in June for the first time in six months, offering new signs the economy is stabilizing thanks to Beijing's measures to shore up growth.
The HSBC/Markit Flash China Manufacturing Purchasing Managers' Index (PMI) rose more than expected to 50.8 in June from May's final reading of 49.4, beating a forecast of 49.7 and creeping above the 50-point level that separates growth in activity from contraction.
It was the first time since December that the PMI was in growth territory, and the highest reading since November, when it was also 50.8.
The upbeat report reinforced market expectations that the world's second-largest economy is powering through its recent soft patch, even if the recovery may be patchy.
Still, many analysts expect the government may need to roll out further steps in coming months to offset the risks from a cooling housing market and persistent export weakness, after China's premier vowed last week that the economy would not suffer a hard landing.
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"This month's improvement is consistent with data suggesting that the authorities' mini-stimulus is filtering through to the real economy," said Qu Hongbin, chief economist for China at HSBC, referring to a series of measures announced by the government in recent months to spur activity. "We expect policymakers to continue their current path of accommodative policy stance until the recovery is sustained,ā€¯ he added.
The reading indicates that second-quarter growth could pick up to 1.8pc, from 1.4pc in the first quarter, Ting Lu, an economist at Bank of America-Merrill Lynch, said in a note to clients.
The flash PMI data is the earliest indicator in a month to help gauge the economic momentum and thus is closely watched by investors. Asian stock markets and the Australian dollar firmed on the news.
