Daily Management Review

Official PMI Data Shows Stronger Than Expected March Factory Growth In China


03/31/2018




Official PMI Data Shows Stronger Than Expected March Factory Growth In China
Increase in construction activity led to greater activity in steel plants in China which, along with the lifting of winter pollution restrictions marked a pick up in the manufacturing sector in the country.
 
 The 50-point mark on the Purchasing Managers' Index (PMI) is a separation point between growth and contraction with growth being recorded for numbers over 50 and according to official PMI data, Chines clocked a figure of 51.5 in March compared to 50.3 in February.
 
The market was expecting a figure of just above 50.5 on the PMI.
 
This data further indicates and supports other data which suggest that there is greater momentum in the Chinese economy in the first quarter of 2017 than what was expected by analysts. This also means that global growth would also be boosted.
 
While the figure of PMI in February was the worst in 1-1/2 years, there are many who accord it to the long Lunar New Year holidays instead of an indication of a slump in consumption.
 
There was a clear indication of seasonal demand picking up domestically in China as well as abroad according to the data for March. While the index for total new order touched 53.3 in March from the 51.0 in February, exports also increased to touch 51.3 from 49.0 in the same period.
 
There is expectation that the first quarter growth for the Chinese economy would be around 6.8 per cent according to the China Logistics Information Centre, in a commentary on the PMI figures.
 
While the economic and manufacturing activities in small and medium firms increased slightly in March after a contraction in February, there was a modest pickup in growth among the large companies.
 
The fastest growing export segment in China is tech which drove the overall exports to grow in the month of March following two dismal months in January and February. Tech is also the fastest growing sector among the industries in China.
 
The outlook for the "old economy" heavy industries and "new economy" tech firms of China have bene cast a shadow following a rising potential trade dispute between China and the U.S.
 
Both the countries have announced plans for imposition of tariffs on exports from each of the countries into the other.
 
"Stress tests have shown the new U.S. tariffs will have a relatively small impact on Chinese steel. Chinese steel firms should not be overly worried and should focus on guaranteeing demand from the domestic market and our major exporters," the China Steel Logistics Professional Committee said.
 
"But it's worth noting that the amount of steel products we supply to U.S. consumers through the global supply chain may well exceed China's direct exports to the United States," it added. "China should proactively oppose U.S. unilateral trade protectionism to maintain the global supply chain."
 
(Source:www.cnbc.com)






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