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Business / Economy

Flash PMI at 5-month peak: HSBC

(Agencies) Updated: 2012-07-24 14:46

BEIJING  -- A China purchasing managers' index rose in July to its highest level since February, boosted by a pick up in the pace of manufacturing output, preliminary results of a survey showed on Tuesday.

HSBC's Flash China manufacturing purchasing managers index rose to 49.5 in July from 48.2 in June, rising close to the 50 level that divides expansion from contraction. The increase was driven by a jump in the output sub-index to 51.2 - the best showing since October 2011.

The new orders sub-index recovered to a three-month high while new export orders gave their best showing since May, although both remained below 50. An employment sub-index fell to its lowest level since March 2009.

The flash PMI is the first significant Chinese data point in the third quarter of the year and signals that a sequential improvement in the economy in the second quarter may be broadening as pro-growth government policies gain traction.

Still, the HSBC PMI has been below 50 for nine straight months, showing a need for those policies to remain in place.

"This calls for more easing efforts to support growth and jobs," Qu Hongbin, chief China economist with index sponsor, HSBC, said in a statement accompanying the survey.

"We believe the fast falling inflation allows Beijing to do so and a more meaningful improvement of growth is expected in the coming months when these measures fully filter through."

The PMI, compiled by UK data provider Markit, showed broad improvement across the manufacturing sector with five sub-indexes showing their rate of decline slowing and five showing a change of direction.

The output price sub-index broke above 50 for the first time in five months, a sign that final demand may be lifting factory gate prices, which have been in deflation for four months.

The flash PMI is based on 85-90 percent of total PMI survey responses, set to be published in full around a week later.

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