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Tuesday, September 23, 2014, 12:52

China factory index ticks up

By Agencies

China factory index ticks up

Sources: HSBC Purchasing Managers’ Index™ Press Release

HONG KONG - Growth in China's sprawling manufacturing industry unexpectedly ticked higher in September, according to a report Tuesday, easing concerns about the No. 2 economy's recovery.

HSBC's purchasing manager index edged up to 50.5 this month from 50.2 in August, based on a 100-point scale on which numbers below 50 indicate contraction.

Analysts had expected the reading to fall for a second month, dragged down by the slumping property market. August's PMI reading was a sharp fall from the 18-month high of 51.7 reached in July.

Tuesday's PMI showed a measure of employment shed more than a point to drop to 46.9, its lowest since February 2009 during the global financial crisis, when a collapse in exports threw tens of millions of Chinese out of work.

A hefty drop in employment could raise alarm bells for the government, which has indicated it will tolerate slower economic growth below 7.5 percent for the year as long as employment is not affected.

China's urban unemployment rate was nearly 4.1 percent at the end of June, though many economists believe the real number may be much higher given its army of migrant workers.

The employment index aside, other measures in the PMI poll fared better.

Total new orders rose, and new export orders also climbed to their highest level since March 2010.

The overall output level remained flat on the month, while output prices fell to a six-month low.


The modestly upbeat number comes after an official report earlier this month showed China's factory output slowed sharply in August, which sparked fears momentum was fading and prompted some analysts to lower their full-year economic growth forecasts.

China's economic growth edged up in the April-June quarter to 7.5 percent after policymakers rolled out a batch of relief measures aimed at areas including railways and public housing. But analysts say further increments in growth will be hard to achieve without more government spending.

"The picture is mixed,'' with the report's sub-indexes for new orders and new export orders improving but employment falling, said HSBC's chief China economist, Qu Hongbin.

"Overall the data still point to modest expansion. The property sector remains the biggest downside risk to growth,'' he said.

The report covered responses from 85-90 percent of 420 factories. The final version is due at the end of September.


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