August saw slight upturn in manufacturing activity in China, while the UK’s manufacturing sector continued to grow.
BBC News reports that China’s manufacturing activity rose to a 16-month high in August, with the official Purchasing Manager’s Index (PMI) increasing to 51 from 50.3 in July. Any reading above 50 indicates an expansion, and so the result has helped to stave off some fears of an economic slowdown in the country.
“We are seeing clearer signs of economic conditions improving,” said Haibin Zhu, Chief China Economist at JP Morgan. The country’s economy reportedly expanded by 7.5 percent in the second quarter of this year compared to the same quarter a year earlier, but was down from a growth rate of 7.7 percent in the first quarter.
The recent slowing growth rate raised fears that the trend would continue due to a decrease in demand for Chinese exports from key markets, including the US and Europe; with The Recycler reporting that manufacturing in China during July reached an 11-month low.
As a result, Beijing has been taking action to boost domestic consumption, with the government suspending value-added tax and turnover tax for small businesses – a move expected to benefit over six million companies as well as boost employment. The city also plans to “implement measures to simplify customs clearance procedures, cut operational fees and facilitate exports of SMBs”.
The Guardian meanwhile reported that the UK’s manufacturing sector continued to grow during August, emerging “strongly” from recession, with the PMI rising from 54.8 in July to 57.2 – the highest level for two and a half years.
It was reported that “the return of confidence, a rosier outlook for exporters and demand for new products” were all factors that contributed to the growth, with industry order books and output “growing at their fastest pace in almost two decades”.
The country’s PMI has been above 50 for the past five months following a tough year in 2012; with The Recycler reporting that the UK economy grew by 0.6 percent during the second quarter of 2013.
James Knightley, Economist at ING, commented: “This is the strongest [PMI] reading since February 2011 and was driven by gains in new orders and production, which both grew at their fastest rate in nearly two decades. Employment was a little softer, but remains in expansion territory, while inflation pressures appear to be building. This report backs up figures from the EEF manufacturers’ association which also reported strong output and orders growth overnight.”
Rob Dobson, Senior Economist at Markit, said: “The UK’s factories are booming again. Orders and output are growing at the fastest rates for almost 20 years, as rising demand from domestic customers is being accompanied by a return to growth of our largest trading partner, the Eurozone.
“The sector therefore continues to build on the solid 0.7 percent expansion registered during the second quarter, and growth could easily break the one percent mark in the third quarter. Manufacturing is clearly making a strong positive contribution to the economy, providing welcome evidence that the long-awaited rebalancing of the economy towards manufacturing and exports is at last starting to take place now that our export markets are recovering.”