China factory sector perks up, elsewhere gloomy

BEIJING: China offered a rare bright spot in an otherwise sluggish Asian manufacturing sector in July with a stronger than expected government purchasing managers index that eased some concerns over the health of the world's second-biggest economy.

Although the China PMI surprised and gave a boost to regional share prices and commodities, it also signalled only a modest pace of growth. A rival report from HSBC was much more gloomy, showing factory activity fell to its lowest in nearly a year.

"I think the official report does offer a slim hope that the economy is stabilising at least, but it is still a bit early to conclude that things have turned around decisively," Wei Yao, China economist at Societe Generale in Hong Kong.

Elsewhere in Asia, other PMI reports suggested factory output and new orders falling in July in India, South Korea and Taiwan. In Indonesia, a PMI report signalled that output and new orders were holding at similar levels to June.

New export orders also fell broadly in Asia. However, overseas demand was still growing in India, although at a weaker pace than in June.

The Asian PMIs, which seek to measure a range of conditions in manufacturing including employment, stock levels and backlogs of work, were released ahead of similar reports on the euro zone and the United States, which are expected to show factory activity picking up at a more robust pace than in Asia.

The euro zone's PMI is expected to show the manufacturing sector grew for the first time in well over a year with the index rising to 50.1 from 48.8 in June. The data is due at 0758 GMT.

A PMI reading above 50 points to expansion from the month before, while a reading below suggests contraction in activity.

In the United States, the Institute for Supply Management is expected to report that its PMI rose to 52.0 in July from 50.9 in June, extending a rebound from a contraction in factory activity in May. The figures are due to be released at 1400 GMT.

Source: http://economictimes.indiatimes.com/news/international-business/china-factory-sector-perks-up-elsewhere-gloomy/articleshow/21525818.cms

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