The CLSA China Purchasing Managers Index, produced by U.K.-based research firm Markit Group Ltd., fell to a record low of 40.9 in November. A PMI reading below 50.0 indicates a contraction.
The monthly-released PMI covers various components or areas of manufacturing such as new orders, production, employment, delivery by suppliers, inventory, export orders, procurement, purchasing prices, imports and overstock, among others.
February data signaled a sharp drop in levels of incoming new business placed at Chinese manufacturers. However, the rate of decline continued to ease from the survey record registered in November. In short, the PMI is inching towards expansion.
The new export orders index rose to 39.5 in February from 36.3 in January and an all-time low of 28.2 in November. The new orders index picked up to 44.2 in February from 39.9 in January, off a record low of 36.1 in November.
The unemployment index broke a nine-month streak of declines, rising to 46.6 in February from an all-time low of 45.0 in January, indicating the pace of layoffs may be slowing down.
Another important indicator is , power generation which in n the middle 10 days of February rose 15% from a year earlier and 13.2% from the first 10 days of the month. Power generation is a closely watched indicator for industrial activity in China.
Analysing the China Manufacturing PMI survey, Eric Fishwick, head of economic research at CLSA said: “The rise in the PMI and its orders indices is encouraging but, as with in January, caution is required in interpretation. Manufacturing activity is still contracting only at a more moderate pace than at the end of 2008. Despite the bounce in credit data in January the impact on domestic manufacturing orders so far seems modest: most of the improvement in the PMI’s new orders index reflects export orders.”
Source : Konaxis
