PMI figures point to buoyant China trade

Expanding manufacturing activity and better-than-expected regional trade figures could point to an increase in China's trade last month, driven by a recovery in the United States and European economies and stronger domestic demand.

Rising export orders and domestic investment helped push the official manufacturing purchasing managers' index to 51 last month, the highest since May last year, fuelling expectations of a stronger August trade. Official trade data for the month is due tomorrow.

Confidence in a global recovery got another boost after South Korea on Monday reported an unexpected 7.7 per cent year-on-year gain in exports last month, far exceeding the expectations of 3.8 per cent growth.

UBS Securities estimates China's exports may have increased about 8.5 per cent last month, compared with a 5.1 per cent rise in July. Imports are likely to have climbed 12.5 per cent, from July's 10.9 per cent increase, thanks to recovering domestic demand, restocking and a pickup in some commodities prices.

Mizuho Securities has a similar projection, saying exports grew 8 per cent while imports were up 12 per cent.

"We believe the August PMI data is evidence that the economy is now bottoming out, partly due to the rebound of both domestic and external demand, and the growth-stabilising policies launched in July," said Mizuho's Shen Jianguang.