New | Chinese business confidence reading hits highest in 12 months
China’s business confidence rebounded in August to the highest in 12 months after sinking to a more than six-year low last month, amid expectations that stimulus measures taken by Beijing to reinvigorate the slowing economy will reap rewards despite the stock market rout.
The MNI China Business Sentiment gauge of current business conditions in August bounced back to an expansionary reading of 57.1, the highest since August 2014, from 48.8 in July, a report released Thursday by MNI Indicators under financial services provider Deutsche Boerse showed. Its reading last month was the lowest level since 2009.
Coming on the heels of underwhelming economic data, the gauge, which is based on a poll of Chinese business executives, is the latest sign of optimism among mainland businesses that the pain caused by the stock market turmoil can be eased by Beijing’s policy easing, including successive rate cuts and the scrapping of reserve ratio requirements.
“For now businesses have shrugged it (the stock market turmoil) off, with key activity measures in the August survey increasing sharply and the stimulus policies of the authorities seemingly having a significant positive impact”, said Philip Uglow, chief economist of MNI Indicators.
Companies also raised their hopes for their output and new orders in the short term following a pullback in July, with future expectation indicators of both factors hitting the highest so far this year.
Although the yuan devaluation and the new fixing rule were not fully captured in the last survey, most firms polled said they were disillusioned with the exchange rate’s impact on their business. The yuan has appreciated against the currencies of its major trading partners over the last decade since Beijing gradually loosened monetary controls.
A raft of China economic figures released last week point to renewed deterioration in world’s second biggest economy which grew at its slowest pace in a quarter century, with exports, fixed asset investment and industrial production growth all missing market consensus targets.
