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Survey sees jump in Sep manufacturing

2013-09-24 10:40 Global Times Web Editor: qindexing

China's manufacturing activity expanded at the fastest pace in six months in September, according to a preliminary survey released Monday, offering fresh signs of an ongoing recovery in the economy.

The HSBC Flash Manufacturing Purchasing Managers' Index (PMI) rose to 51.2 in September from 50.1 in August, the highest level since April, data released by HSBC on Monday showed.

A PMI reading above 50 signals growth, while a reading below 50 indicates contraction.

"The firmer footing was supported by simultaneous improvements in external and domestic demand conditions. We expect a more sustained recovery as the further filtering-through of fine-tuning measures should lift domestic demand," Qu Hongbin, chief China economist at HSBC, said in a statement Monday.

"This will create more favorable conditions to push forward with reforms, which should in turn boost the mid- and long-term growth outlook," Qu said.

Among the survey's 11 sub-indexes, 10 rose at a faster pace in September, including the sub-indexes for new orders and new export orders. The flash output index also rose to a five-month high of 51.1 in September, up from 50.9 in August.

The HSBC PMI is weighted more toward smaller private companies compared with the official PMI, which surveys larger State-owned firms. The official PMI for August rose to a 16-month high of 51, up from 50.3 in July. The official reading for September is due to be released on October 1.

"There is no doubt the economy is recovering but the current recovery is different from what has been seen before," Li Huiyong, chief economist at Shenyin & Wanguo Securities in Shanghai, told the Global Times Monday.

"The current PMI improvement has been driven by a recovery of exports and the increasing impact of the government's fine-tuning policies, which help to boost business confidence," Li said.

Positive signs for China's economy have emerged since August amid a raft of improved economic data for industrial output, retail and exports, indicating that the economy is stabilizing following a slowdown in the first half.

Premier Li Keqiang said at the opening ceremony of the Summer Davos Forum early this month that the recent steady progress in economic growth instills confidence that the country will "meet the economic and social development goals set for the whole year."

But Li also acknowledged the foundations for the economic recovery are still fragile, noting that reforms are needed to sustain healthy economic growth in the long run.

The economic recovery may continue until November, but we do not expect it to be sustainable beyond then as monetary policy may tighten after a key Party conference (in November). said Zhang Zhiwei, chief China economist at Nomura Securities.

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