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Bloomberg
June 1/09
"China's economic growth may accelerate to 6.8 percent this quarter from 6.1 percent in the first three months, according to a Bloomberg News survey of ..."
bloomberg.com
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Chinese Manufacturing Grows, Adding to Recovery Signs By Bloomberg News
June 1 (Bloomberg) -- China’s manufacturing expanded for a third month, driving stocks to the biggest gain since March and adding to evidence that the economy is recovering.
The official Purchasing Manager’s Index was at a seasonally adjusted 53.1 in May after registering 53.5 in April, the Federation of Logistics and Purchasing said today in Beijing in an e-mailed statement. A reading above 50 indicates an expansion.
A surge in lending and investment and rising retail sales have spurred confidence that Premier Wen Jiabao’s 4 trillion yuan ($586 billion) stimulus package is reviving growth in the world’s third-biggest economy. U.S. Treasury Secretary Timothy Geithner said today that the global recession may be easing, helped partly by China’s “very forceful” measures.
“The Chinese economy is well on track for recovery and economic growth is picking up steam,” said Lu Ting, an economist at Merrill Lynch & Co. in Hong Kong.
The Shanghai Composite Index rose 3.4 percent, taking this year’s gain to 49 percent as investors bet that stimulus spending will revive earnings. Jiangxi Copper Co., the country’s biggest producer of the metal, surged 9.1 percent. Australia’s dollar traded near an eight-month high on optimism that demand for commodities will rise.
‘Signs of Improvement’
The world economy is seeing “initial signs of improvement,” Geithner said in Beijing today. He’s meeting Chinese leaders as they grapple with the nation’s deepest economic slump in almost a decade.
U.S. manufacturing probably shrank in May at the slowest pace in eight months, a further sign that the worst of the slump may be over, economists said before a report today. The Institute for Supply Management’s factory index rose to the highest level since September, according to the median forecast of 63 economists surveyed by Bloomberg News.
In China, a second manufacturing index released today, by CLSA Asia-Pacific Markets, also showed an expansion.
“For the first time the PMI shows genuine evidence that policy really is gaining traction,” said Eric Fishwick, head of economic research at CLSA in Hong Kong. A jump in orders and declines in companies’ inventories suggest “sustained output growth in months to come.”
By the end of April, China had built 20,000 kilometers (12,430 miles) of rural roads, 214,000 low-rent homes, 445 kilometers of highway, and 100,000 square meters (1.08 million square feet) of airport buildings under the stimulus plan, the National Development and Reform Commission said on May 21.
Industrial Output
“Economic growth may continue to pick up in the future as accelerating investment and consumer demand boost industrial production,” Zhang Liqun, an economist at the State Council Development and Research Center, said in a statement with the official PMI.
Zhang said that while business sentiment remains “weak,” a PMI reading above 50 shows that “the economy will continue to recover.”
In the government-backed PMI, the export order index increased to 50.1, the first expansion in 11 months. The output index fell to 56.9 from 57.4 and the new order index dropped to 56.2 from 56.6.
Dongfeng Motor Group Co., China’s third-largest automaker, said stimulus measures helped boost sales in the first four months of the year.
Lending Risks
Industrial production growth may accelerate to 8 percent this quarter as stimulus spending gathers momentum, up from 7.3 percent last month and 5.1 percent in the first three months, the Ministry of Industry and Information Technology said May 22. Output may increase 10 percent in the second half, it added.
Still, China’s banking sector is facing “grim credit and market risk” as corporate earnings fall because of an over- concentration of lending in certain industries and regions, the China Banking Regulatory Commission said today in its 2008 annual report.
Real estate is among industries that may default on loans, causing growing pressure on Chinese banks after economic growth dropped to the weakest in almost a decade, the statement said.
China’s economic growth may accelerate to 6.8 percent this quarter from 6.1 percent in the first three months, according to a Bloomberg News survey of economists.
The official PMI, released jointly with the statistics bureau, spans measures of manufacturing activity including orders, inventories, output and employment.
To contact the reporter on this story: Paul Panckhurst in Beijing at ppanckhurst@bloomberg.net
Last Updated: June 1, 2009 09:35 EDT |
