Chinese manufacturing is growing again in August, according to a flash purchasing manager's index (PMI) release from HSBC.
Rising from 47.7 to 50.1, Chinese order books are just managing to grow (any number above 50 implies growth in the sector), while defying economist estimates of a more modest improvement to 48.3.
Despite this better data, fears of a Chinese slowdown are likely to persist, and have weighed on global growth expectations and many commodities firms.
Mark Williams, chief Asia economist, Capital Economics:
The strong rebound in August’s flash PMI should reassure even the most bearish that China has avoided an imminent hard-landing. We continue to believe however that the rebound will prove short-lived and that a further slowdown lies ahead.
The more forward-looking new orders component rebounded from 46.6 to 50.5, contributing nearly half of the pick-up in the headline PMI. The gain looks entirely driven by domestic demand, as the component for new export orders fell to 46.5, after last month’s pick-up to 47.7.
China’s summer turnaround looks real. In turn, this implies that there is little need for further stimulus measures to shore up the economy. The official GDP target of 7.5% is within reach. The government’s focus now should return to reining in overcapacity and credit.