Chinese manufacturing indices rose last month as the world’s second-biggest economy withstood weaker exports driven by Europe’s debt crisis and a government-induced property slowdown.
The official purchasing managers’ index (PMI) increased to 50.5 from 50.3 in December, exceeding the median estimate in a Bloomberg News survey for a reading below the 50 level that divides expansion from contraction. A separate gauge from HSBC Holdings PLC and Markit Economics rose to 48.8. The data could have been distorted by a week-long holiday.
Chinese Premier Wen Jiabao (溫家寶) on Tuesday reiterated his government’s will to “fine-tune” economic policies as needed after the People’s Bank of China held off on a reduction in bank-reserve requirements that some analysts had forecast for last month.
Indexes for export orders, imports and employment in the official PMI showed a deeper decline, underscoring an IMF warning last week that the eurozone crisis could trigger another global recession.
“Today’s data further confirmed a soft-landing story for China,” said Ken Peng, a Beijing-based economist at BNP Paribas SA. “However, consumer demand may weaken after holiday effects disappear,” and global “uncertainties” and the Chinese government’s efforts to curb property prices “will continue to weigh on exports and industrial production,” Peng said.
That will result in a bigger slowdown in China’s growth in the -coming months, he said.
The Lunar New Year holiday, which ran from Jan. 22 through Jan. 28, helped increase consumer spending and domestic demand, the Beijing-based statistics bureau said in a statement on its Web site.
The festival provided a “temporary boost” to the data, said Yao Wei (姚煒), a Hong Kong-based economist at Societe Generale SA.
The official PMI reading, released by the Chinese National Bureau of Statistics and Chinese Federation of Logistics and Purchasing compared with a median estimate of 49.6 from 17 analysts. Eleven forecast a contraction.
A gauge of output rose to 53.6, the highest since May last year. Readings for new export orders and imports contracted for a fourth month and an employment index dropped to 47.1, the lowest in almost three years.
The PMI released by HSBC was unchanged from the preliminary reading released on Jan. 20.
Although it was the third straight contraction, the gauge rose from 48.7 in December and 47.7 in November.
The federation’s index is based on a survey of managers at more than 820 companies in 28 industries, while the HSBC indicator surveys more than 430 companies.
The official PMI report suggests manufacturing “has stabilized somewhat due to supportive fiscal and monetary policies,” said Liu Li-gang (劉利剛), a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd, who accurately predicted yesterday’s reading. “Stronger-than-expected PMI also provides solid evidence that a hard landing for China’s economy is very unlikely.”
Even with yesterday’s gain, Chinese officials will lean toward being “more accommodative” in their monetary policy to protect against risks in the property market and a “still uncertain outlook,” Liu said.