China’s manufacturing activity rose in April to a 13-month high, official data showed yesterday, indicating the world’s number two economy may have bottomed out in the second quarter.
There are signs of life in the economy and things should improve, all underpinned by an easing credit climate
The official purchasing managers index (PMI) rose to 53.3 from 53.1 in March, its fifth consecutive month of expansion, the China Federation of Logistics and Purchasing said in a statement.
A reading above 50 indicates expansion, while a reading below 50 suggests contraction.
The latest figure was the highest since March last year, when the PMI reached 53.4, although it fell slightly short of the forecast of 53.5 from seven economists polled by Dow Jones Newswires.
Alistair Thornton, economist for IHS Global Insight in Beijing, said the figures showed activity picking up but cautioned it was “too early to break out the champagne”.
“China remains in a tough spot. Timid monetary easing over the past few months has ensured the gentlest of bounce-backs following the recent crunch,” he said in a research note.
“There are signs of life in the economy and things should improve, all underpinned by an easing credit climate. But the recovery will be slower, more volatile and less assured than perhaps markets were hoping for.”
China’s economy is widely expected to slow this year as troubles in key export markets such as Europe and the US hit its overseas sales.
The government in March set a target of 7.5 per cent economic growth this year. China’s economy grew 9.2 per cent last year and 10.4 per cent in 2010.
Some analysts expect China’s economy to have bottomed out in the first quarter but others say recovery might be delayed until the second quarter.
HSBC issued preliminary data last week that showed China’s manufacturing activity shrank in April for the sixth straight month, although the reading was higher than for March, indicating a slower contraction.
The bank’s figures are typically more pessimistic than China’s official numbers.