The first of the two surveys of confidence on the performance of China’s huge manufacturing sector has shown a pick up in September.
The old CLSA survey, now produced by HSBC Bank, rose to 52.9 in September, up from 51.9 in August and just under 50 in July, so the improvement has been significant in the past two months.
(Remember with these sorts of survey, 50 is the dividing line between expansion, above and contraction, below).
"The upbeat reading … implies that China’s growth slowdown is slowing," HSBC’s chief economist for China, Qu Hongbin said in commentary on the report.
The survey, compiled in association with Markit Economics, also found new export business increased for the first time in four months, while employment in manufacturing saw a marginal increase, and input-price inflation "accelerated markedly".
HSBC’s Qu said rising new orders shows that domestic demand is still strong.
According to several news reports respondents to the HSBC survey indicated that the rise in inflationary pressures were linked mainly to higher raw-material prices, with steel prices commonly cited.
Some reports said manufacturers have raised selling prices, helping drive output-price inflation to an eight-month high.
But inventories were under control and sales seemed strong
He added that China should grow at an annual 9% rate throughout the remainder of this year and 9% through 2011, supported by investment in infrastructure and domestic consumption.
That’s close to the forecast from the Asian Development Bank on Tuesday of 9.6% this year and 9.1% in 2011.
The second survey of Chinese manufacturing, the Government backed PMI (Purchasing Managers Index) is due to be released on Friday (the same as when surveys in Australia, Europe and the US will be released).
This index is produced by the National Bureau of Statistics and the Federation of Logistics and Purchasing,. It had a reading of 51.7 in August and forecasts for a small rise to just over 52.
The news saw share market surge across the region, with Hong Kong’s Hang Seng up 2.1% within 15 minutes of the HSBC survey results being released.
The index had been trading around 1% higher before the announcement after falling Tuesday.
In the end Hong Kong finished up 1.3% at an 8 month high, South Korea was higher, Australia was lower and the Japanese market rose 0.7%
The MSCI Asia Pacific Index rose by 0.7 to finish at a five month high
The Australian dollar rose above 97 USc during the night, but eased to 96.85 this morning.
The Australian dollar continued to rise overnight, climbing to another fresh two-year high of 97.3 US cents as it consolidated recent strong gains.
And for the first time in six years, it was on equal footing with the Canadian dollar.
The Aussie dollar was fractionally worth more than the Canadian currency briefly overnight and this morning was a touch lower. It is the first time the two currencies have been one-for-one since 2004.
The Australian dollar broke through the 97-US-cent mark yesterday afternoon and touched the 97.3 mark again in evening trade. This morning it was buying 96.88 US cents.
The dollar is now up 19% since its 2010 low of 81.58-USc in May.
Wall Street markets eased as the China growth story faded.
