China set to maintain manufacturing growth

28-04-2011

China's manufacturing sector is expected to maintain a steady pace this month despite frequent tightening measures launched by the government, according to a preliminary reading for the HSBC Purchasing Managers' Index.

The HSBC Flash China Manufacturing PMI stayed at 51.8, the same as the final reading for March.

The HSBC Flash China Manufacturing Output Index, however, fell to a nine-month low of 51.6, and input prices grew at a slower pace.

"The flash indices confirmed that China's manufacturing sector growth has stabilized at a steady pace," said Qu Hongbin, chief economist of China and co-head of Asian Economic Research at HSBC Bank. "Meanwhile, prices continue to rise, albeit at a slower pace."

Qu said these factors, together with the stronger growth and inflation data released last Friday, suggested that inflation remained the top macro-economic risk, which called for tightening efforts to continue in a bid to cool inflationary pressure in the second half of 2011.

The flash data are published monthly about one week before the final PMI data are released. The estimate is based on a more than 85 per cent of total PMI survey responses.

China's gross domestic product expanded 9.7 per cent from a year earlier in the first three months. But inflation soared to a 32-month high of 5.4 per cent in March.

To rein in inflation, China has lifted the interest rates twice this year, together with four hikes in the reserve requirement ratio.

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