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Thursday, 5 February 2009

China shows recovery signs

SHANGHAI - CHINA'S manufacturing activity showed signs of recovering in January, data indicated on Wednesday, in a rare piece of optimistic news for the world's third-largest economy.

Some economists said the data could signal that China's manufacturers had overcome the worst of the economic crisis, with companies exhausting their old stock and placing new orders.

'Manufacturing in China is still contracting, but the bottom is now in sight,' said Sherman Chan, an analyst with Moody's Economy.com.

The government's purchasing managers' index, or PMI, rose to 45.3 per cent in January, up from 41.2 per cent in December and a record low of 38.8 per cent in November, the official Xinhua news agency reported. A reading above 50 means the manufacturing economy is expanding, while a reading below 50 indicates an overall decline.

'The accelerated rise of manufacturing PMI undoubtedly points to a recovery in China,' Merrill Lynch said in a research note.

However, Citigroup economist Ken Peng cautioned that talk of a recovery could be premature. 'Being 'less bad' is not the same as 'recovery',' he said.

Indeed, January's figure was the sixth consecutive month that the PMI was below 50 per cent. And a similar survey by CLSA Asia-Pacific Markets, a leading independent brokerage, released on Monday gave less optimistic results.

The CLSA China Purchasing Managers Index, stood at 42.2 in January, up only slightly from 41.2 in December.

China's manufacturing sector accounts for more than 40 per cent of the nation's economy. -- AFP

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