China's exports keep factories on growth path
Reuters in Beijing
The mainland's factory sector grew last month after rising foreign orders made up for a subdued home market, a private survey showed. While the data suggests Asia's economic powerhouse is starting to turn the corner, a firm rebound remains elusive.
The final HSBC Purchasing Managers' Index (PMI) edged up to 50.2 in September from August's 50.1, although that was below last week's flash reading of 51.2, with domestic orders proving to be weaker than preliminary estimates suggested.
New export orders picked up the slack, climbing above the 50-point mark separating expansion from contraction to 50.7, from 47.2 in August. After seasonal adjustments, however, the expansion was slight, HSBC said yesterday.
Still, the data should support financial markets and comfort investors eager to see the mainland economy stabilise, even if the revival is likely feeble and perhaps even short-lived.
Qu Hongbin, an HSBC economist, said stronger manufacturing growth was driven by companies replenishing their stocks, albeit slowly.
"Growth is bottoming out on Beijing's mini-stimulus," Qu said, noting, however, that growth in domestic demand was unchanged from August.
Beijing's policy action and a firmer United States economy - the second-biggest buyer of mainland exports after Europe - have put a floor beneath the mainland's economic growth, which has slowed in 12 of the past 14 quarters.
To reinvigorate economic expansion, the central government has fast-forwarded infrastructure investment, lowered taxes for small companies, and sustained spending in public housing.
But analysts warn that the mild pick-up in the mainland's economy could fizzle if Beijing keeps its promise and enacts financial reforms that include curbing state investment, a move that would hurt growth in coming months.
There are also signs in parts of the PMI poll that the economy is not out of the woods yet. The survey showed that factories cut jobs for the sixth consecutive month in September as workers resigned and firms downsized.
And although output and new orders were shown to have grown last month, HSBC noted that expansion was fractional after seasonal adjustments.
In fact, it said some companies reported a contraction in output, citing unstable economic conditions.