China: PMI increases for third consecutive month
March 1, 2012
The Purchasing Managers' Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFPL) rose from 50.5 points in January to 51.0 points in February, slightly overshooting market expectations that had the PMI rising to 50.9 points. The February reading represents the third consecutive monthly increase and, at the current level, the PMI is sitting at its highest point in five months. The February increase was broad-based, as 4 out of the 5 sub-categories used to calculate the overall index recorded gains over the previous month. In addition, a majority of components were above the 50-point threshold that separates expansion from contraction. New orders, which account for 30% of total PMI, rose to 51.0 points, while production output, which accounts for a quarter of the total PMI, grew to 53.8 points. Moreover, export orders jumped into expansion mode for the first time since September 2011, rising to 51.1 points. Meanwhile, the input prices category, which is a reliable leading indicator of consumer prices, climbed to 54.0 points, its highest level in five months. Although the February rise was expected due to the seasonal pick up after the Chinese New Year holidays, the outturn reinforces the notion that China is averting a hard landing.