Manufacturing activity in China has expanded for the first time in four months, the UK-based HSBC bank has announced. The rebound bodes well for higher growth in the world’s second biggest economy in the coming months.
HSBC's purchasing managers index (PMI) for manufacturing in China reached 50.1 points in August, up from July's final reading of 47.7 points, the British bank announced Thursday.
The August reading of the closely watched economic indicator was the highest since April, suggesting that the Chinese economy was stabilizing after three months of contraction, HSBC announced.
Qu Hongbin, HSBC's chief economist for China, said that the country's growth had begun to stabilize on the back of modest improvements in new business and output.
He attributed the rise to initial filtering-through effects caused by government measures to shore up some sectors of the economy, including tax cuts for small businesses.
HSBC's PMI surveyed opinions of about 420 purchasing managers in China's manufacturing sector. A reading above 50 points indicates output expansion, and anything below signals contraction.
Qu also said that the government stimulus was likely to deliver some upside surprises to China's growth in the coming months.
The rate of economic growth in the world's second biggest economy slowed sharply in recent months. In 2012, China posted its worst growth rate in 13 years, at 7.8 percent. The rate slowed further to 7.5 percent in the second quarter of 2013. Some economists even predicted that China's gross domestic product (GDP) would fall below 7 percent in the third quarter, raising the prospect of a rise in unemployment.
China's leaders said they were comfortable with annual GDP growth of 7.5 percent under efforts to nurture growth based on domestic consumption rather than driven by exports.
uhe/mkg (AP, AFP, dpa)