Business / Macro

China's factories spring to life as global trade reawakens

(Agencies) Updated: 2014-08-01 17:28

SYDNEY - Activity in China's vast factory sector expanded at the fastest pace in 27 months in July, while industry surveys across Asia showed a pick up in export orders that hinted at a long-awaited revival in global trade.

China's official manufacturing purchasing managers' index (PMI) rose to 51.7 in July - the strongest since April 2012 and up from 51 in June, the National Bureau of Statistics said on Friday. Economists had expected a reading of 51.4.

The upbeat result was echoed in the HSBC/Markit China measure of manufacturing which climbed to an 18-month peak of 51.7, from June's 50.7. Anything above 50 in these surveys separates growth from contraction.

China's factories spring to life as global trade reawakens 
Infographic: China's economic performance in H1, 2014 
China's factories spring to life as global trade reawakens 
China June HSBC PMI shows first expansion in six months 
The reports added to evidence that Beijing's stimulus measures were gaining traction in the world's second-largest economy, and followed news that growth in the United States had rebounded from a winter lull.

"Taken literally, these PMIs signal an exceptionally strong start for third quarter growth in China," said Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore.

"Each time the PMIs have printed around 51 to 52 in recent years, annual economic growth peaked at around 8 percent in the same quarter, and so we pencil that in as a starting point."

Orders flood in

China was not alone in scenting better times ahead.

India's factory activity expanded at its fastest pace in 17 months in July as firms responded to burgeoning new orders by increasing output.

The HSBC PMI, compiled by Markit, rose to 53.0 in July from 51.5 in June, its highest since February 2013.

"A flood of new orders from both domestic and external sources has led to a surge in activity," said Frederic Neumann, co-head of Asian economic research at HSBC.

"Details within the survey show that all monitored categories witnessed a rise in output and order flows."

Adding to the promising omens for global trade, South Korea reported exports to the United States expanded by over 19 percent in July, the fastest clip in nine months.

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