China Manufacturing Gain Negates Hard Landing as Price Pressures Moderate
By Bloomberg News - Oct 2, 2011
Signs of stability in China’s manufacturing industry in September may ease concern the world’s second-largest economy will suffer a slump in economic expansion that escalates the risk of another global recession.
The Purchasing Managers’ Index published Oct. 1 by the China Federation of Logistics and Purchasing rose for a second month, to 51.2, with new export orders gaining and an inflation measure -- factories’ input costs -- moderating. A separate PMI from HSBC Holdings Plc and Markit Economics on Sept. 30 was unchanged from August, at 49.9. Readings above 50 signal expansion.
“That’s a nice break in a grossly bearish environment,”Dong Tao, a Hong Kong-based economist at Credit Suisse Group AG, said of the Oct. 1 PMI data. “I don’t think that the Chinese economy is out of the woods, but any good news is great news.”
The figures bolster the odds that Premier Wen Jiabao’s government will succeed in defusing the fastest gains in consumer prices since 2008 without a collapse in China’s growth, the strongest among the major economies. Twelve percent of global investors in a Bloomberg poll last week predicted a slowdown in Chinese gross domestic product gains to less than 5 percent within a year, a pace unseen in the past two decades.
Wen, on the eve of the weeklong National Day holiday that began Oct. 1, said the trend of relatively fast consumer price gains was “under control.” The Oct. 1 manufacturing reading was the highest in four months, and exceeded the 51.1 median estimate in a Bloomberg News survey of 13 economists.
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