China PMI Hits 52.4, Highest Since 2012
China has headed off into its week-long National Day/mid-Autumn festival, but before it vanished we learned that big Chinese manufacturing companies are humming along at their fastest rate in five years, but smaller companies may be seeing a bit of an easing in activity.
But nevertheless both surveys clearly show that the country’s still dominant manufacturing sector ended the third quarter on an upbeat note.
When China returns from the long break - it has been extended to October 8 - the country will prepare for the 19th National Congress at which the new leadership team will be produced, with President Xi at long odds to be ‘re-elected’. That starts October 18.
Data for the month of September and then the quarter will be released from around October 13, with the 3rd quarter GDP figures out a week later on October 20.
Even though activity has slowed in some parts of the property sector with more local governments announcing measures to control prices, that has not had any impact on Chinese manufacturing.
The official Purchasing Managers Index survey, released on September, showed China’s manufacturing activity grew at the fastest pace since 2012 in September as factories cranked up output to take advantage of strong demand and high prices.
Production, total new orders and output prices all improved to the highest level in at least a year, while a pick-up in a reading for the construction sector indicated a building boom is undiminished.
The official Purchasing Managers’ Index (PMI) released on Saturday rose to 52.4 in September, from 51.7 in August and well above the 50-point mark that separates growth from contraction on a monthly basis.
That was much stronger than the The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) which fell to 51.0 in September, compared with 51.6 in August, as new export order growth slipped.
The two surveys though marked the 14th straight month of expansion for China’s massive manufacturing industry and the highest reading since April 2012.
China’s manufacturers are reporting their best profits in years, thanks to government-led infrastructure spending, a strong housing market, higher factory-gate prices and solid exports.
A separate PMI on the steel industry fell to 53.7 in September from 57.2 in August but that is still a solid pace of growth.
What happens this month will be a very interesting story with the industry starting production cuts aimed at reducing pollution and smogs over the winter(especially in Beijing).
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.