Statistics

Manufacturing growth quickens

By Nerys Avery (China Daily)
Updated: 2011-03-25 09:54

A workshop of Zhejiang Hailiang Co Ltd in Shaoxing, Zhejiang province. The nation's manufacturing growth is accelerating despite tightening measures, according to preliminary data from a survey by HSBC Holdings Plc and Markit Economics. [Photo / China Daily]

BEIJING - China's manufacturing growth is accelerating, according to preliminary data from a survey of purchasing managers, signaling the economy may withstand increased interest rates.

The index may rise to 52.5 from 51.7 in February, HSBC Holdings Plc and Markit Economics said in a statement on Thursday. This is the second time advance data has been released.

Producer prices in China jumped at the fastest pace in 29 months in February and consumer-price gains exceeded government targets for the eighth straight month. Interest rates in the world's fastest-growing major economy may be raised as early as next month as inflationary pressure builds from higher oil, food and labor costs, according to Bank of America-Merrill Lynch economists.

The data "should reduce concerns about a sharp slowdown in growth", Qu Hongbin, chief economist for China at HSBC, said in the statement. "Beijing's policy tightening is working to contain inflationary pressures without choking off growth."

A preliminary gauge of output climbed to 55.1 from a final reading of 51.9 in February, according to the statement. Thursday's data showed renewed growth in export orders and slower increases in input and output prices.

Inflation should slow "meaningfully" by the middle of the year as the government continues to tighten policy, Qu said. Consumer prices rose an annual 4.9 percent last month.

Related readings:  Growth quality not quantity  China's growth this year slower but still robust: official  China's manufacturing growth continues to slow in February  China's PMI drops to 6-month low in February

A sub-index for new export orders registered an expansion in March after dropping below 50 for the first time in six months in February. Overall new orders expanded at a slower pace, according to Thursday's statement, which did not give a numerical breakdown of the sub-indexes. A reading below 50 indicates a contraction in activity, while a reading above 50 suggests an expansion.

Goldman Sachs Group Inc lowered its first-quarter growth forecast for China on Thursday to 10 percent from 10.2 percent, citing increasing evidence that expansion is cooling as the government counters inflation.

Officials may "lower the intensity and frequency of some policy-tightening measures," economists Helen Qiao and Yu Song wrote in a note.

The People's Bank of China (PBOC), the central bank, has raised interest rates three times since mid-October and ordered banks to set aside more deposits as reserves six times since late November to control credit growth and inflation.

The PBOC's deputy governor Yi Gang said on Wednesday that interest rates are at a "comfortable" level and that he's "not too worried" by inflation, which will ease in the second half of the year.

HSBC's manufacturing index is based on monthly replies to questionnaires sent to purchasing executives at more than 400 state and private companies. The preliminary figure is based on 85 to 90 percent of responses, with the final data due on April 1, HSBC said.

The actual purchasing managers' index grew at the slowest pace in seven months in February, declining to 51.7 from 54.5 the previous month, HSBC said on March 1, mirroring the decline in that month's preliminary flash index to 51.5.

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