China: July PMI confirms growth momentum
August 1, 2014
The Purchasing Managers Index (PMI) jumped from 51.0 points in June to 51.7 points in July, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP), which publish the index. July’s print overshot the 51.4 points that market analysts had expected and represented the highest level since April 2012. As a result, the PMI is moving further above the 50-point threshold that separates expansion from contraction in the manufacturing sector, where it has idled since September 2012.
July’s increase reflected an improvement in three of the five sub-categories of the index, with manufacturing output and new orders recording the largest monthly gains. Inventories of finished goods also registered a sizeable improvement. Conversely, employment and the supplier delivery time sub-indices deteriorated slightly in the same month. In addition, new exports orders jumped to the highest level since March 2013, while input prices—a reliable leading indicator for consumer prices—hit a seven-month high in July.
The strong reading tallied in July suggests that growth momentum continues to build in the third quarter, mainly due to improving exports, rapid fiscal spending and targeted policy easing rolled out since March of this year.