PMI reveals 'appropriate adjustment' in growth

By Wang Xiaotian (China Daily)
Updated: 2011-05-02 09:15
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April's numbers show moderate improvement in manufacturing

BEIJING - Chinese manufacturing growth slowed in April after a short pick-up in March as the government tightened liquidity and allowed the yuan to appreciate faster.

The official purchasing managers' index (PMI), which measures industrial activity, fell to 52.9 in April from 53.4 in March, the China Federation of Logistics and Purchasing (CFLP) said on Sunday.

The data showed an "appropriate adjustment" in growth as the country restructures its economic growth pattern, the CFLP added.

The index declined for three consecutive months from a peak of 55.2 last November before increasing in March. The PMI is based on a survey of 820 companies in 28 industries.

The PMI also showed that the input price index fell to 66.2 in April, down 2.1 percentage points on the previous month.

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The HSBC China Manufacturing PMI in April was 51.8, below the long-run series average of 52.3, but slightly up from 51.7 in March, a 27-month low.

The result indicated a moderate improvement in operating conditions for the country's manufacturing sector, according to the Hong Kong and Shanghai Banking Corporation.

"The final results from April's manufacturing PMI survey confirmed the picture of steady growth across the manufacturing sector," said Qu Hongbin, chief China economist and co-head of Asian Economic Research at HSBC.

"This, plus stronger-than-expected March growth and inflation data, calls for a continuation of Beijing's tightening efforts in the coming months," he said.

Faster appreciation of the yuan may also moderate the country's economic momentum in addition to the introduction of measures to counter inflation and cool the real estate market.

China's GDP grew 9.7 percent in the first quarter while inflation jumped to a 32-month high of 5.4 percent in March. In April, the central bank raised interest rates for the fourth time since October, and increased the reserve requirement for lenders for the fourth time since the beginning of the year.

The nation's fifth increase in benchmark interest rates since the global financial crisis is expected soon, possibly as early as Monday, Credit Suisse Group AG was quoted by Bloomberg as saying on Sunday.

Earlier, on April 28, the World Bank raised its forecast for China's GDP growth this year from 8.7 percent to 9.3 percent, due to strong corporate investment and a robust labor market, and predicted economic growth rate will slow to 8.7 percent in 2012.