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China's Manufacturing Sector Expands Most Since January 2011

chinapmi sept05 03aug20 lt

China's manufacturing sector expanded at the fastest pace since early 2011 as market conditions continued to recover from the coronavirus outbreak, survey results from IHS Markit showed Monday.

The Caixin manufacturing Purchasing Managers' Index rose to 52.8 in July from 51.2 in June. A score above 50 indicates expansion.

Companies registered the fastest expansions of output and new orders since January 2011 amid reports of firmer customer demand. New business grew at the steepest rate since the start of 2011.

At the same time, new orders from overseas fell at the slowest rate for six months. Increased production led to the strongest rise in purchasing activity since January 2013.

Further, firms maintained a cautious approach to hiring, with staff numbers falling moderately despite an increase in backlogs of work.

Inflationary pressures picked up, with firms reporting steeper increases in both input prices and output charges.

Companies were generally confident that output would be higher than current levels in 12 months' time.

Wang Zhe, senior economist at Caixin Insight Group, said "Overall, flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy, which continued to recover as more epidemic control measures were lifted."

"The supply and demand sides both improved, with relevant indicators maintaining strong momentum. However, we still need to pay attention to the weakness in both employment and overseas demand," the economist said.

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