China's Manufacturing Growth Tops Expectations On Orders
February 28 2017 - 7:33PM
RTTF2
China's manufacturing activity expanded again in February as
strong foreign demand pushed up overall new orders, despite
concerns over trade protectionism measures from the U.S.
administration.
The Caixin factory Purchasing Managers' Index improved
unexpectedly to 51.7 in February from 51.0 in January, according to
a private survey from IHS Markit, released Wednesday. The reading
was forecast to drop to 50.8. A score above 50 indicates expansion
in the sector.
The survey suggested an improvement in overall business
conditions for the sixth month in a row and the latest growth was
the joint-second strongest for just over four years.
The official manufacturing PMI climbed to 51.6 from 51.3 a month
ago, the National Bureau of Statistics revealed. The score was also
above the expected level of 51.2. Meanwhile, the non-manufacturing
PMI dropped to 54.2 from 54.6.
Today's PMIs suggest that growth remains reasonably strong by
recent standards, Julian Evans-Pritchard, a China economist at
Capital Economics, said.
But this largely comes on the back of stronger external demand
which is unlikely to be sustained, the economist added.
IHS Markit survey showed that production expanded at a faster
pace compared to January, but the rate of growth was moderate
overall and below those seen through the final quarter of 2016.
Supporting higher production was a further rise in total new
business. The upturn in new work was partly driven by stronger
growth in new export sales. Furthermore, new orders from abroad
increased at the quickest pace since September 2014.
Nonetheless, companies continued to report lower staff numbers
in February, as has been in each month since November 2013. That
said, the rate of job shedding was the slowest seen for two
years.
Average input costs rose sharply in February despite the rate of
inflation easing to a four-month low. According to respondents,
higher raw material costs were the key driver of inflationary
pressures.
In order to protect their margins, manufacturers increased their
output charges again at a solid pace.
Further, the survey showed that optimism towards the one-year
business outlook reached a 21-month peak in February. Confidence
was generally linked to new product developments and improving
market conditions.
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