none

SIGNS OF LIFE IN CHINESE ECONOMY ARE NO GUARANTEE OF RECOVERY

02-12-2016
by 
in 
Industrial production has stabilised in China

The old adage that when the USA sneezes the world catches a cold may well still hold true. But, for Australia at least, in recent years the sneezes and sniffles that have been the most contagious have come from China.

However, this week the patient has shown some signs of recovery. The release of the official China PMI (purchasing managers’ index) figure of 51.2 for October was not only up on the previous month’s figure, it was well ahead of expectations. Indeed, it was the highest for two years.

And that improvement could well be rubbing off on Australia, with this week’s Australian PMI released by the Ai Group increasing by 3.3 points to 54.2 in November.

However, further reports originating from China council caution and suggest that the basic PMI figures may only indicate brief remission from the underlying disease.

The figures come from a new survey released by the Cheung Kong Graduate School of Business (CKGSB) - China's first faculty-governed and independent business school.

The detailed report, conducted by the CKGSB’s Professor Gan Jie, directly surveyed more than 2000 Chinese companies, and this indicated that China's industrial economy has not yet stabilised. Both the Business Sentiment Index and employment index from the report came in at less than 50 for Q3, indicating that the economy is contracting.

On the plus side, though, the report did conclude that after seven quarters of continuous decline, production has stabilised, thanks to an increase in output of consumer goods. However, it also concluded that weak demand and overcapacity continue to dominate the Chinese industrial landscape.

So while the patient would appear to have stabilised, reports of a recovery would appear to be premature.

Related news & editorials

  1. 03.12.2018
    03.12.2018
    by      In
    Australian manufacturing continues to grow, according to the Ai Group’s latest Performance of Manufacturing Index, but the figures show some worrying signs. The Australian PMI for November 2018 remained in positive territory at 51.3, but at a full seven points below the previous month, this is the... Read More
  2. 20.11.2018
    20.11.2018
    by      In
    All Australian states and territories recorded an increase in gross state product in 2017-18, according to the latest figures from the Australian Bureau of Statistics. The ACT, Victoria, Queensland and Tasmania exceeded the national gross domestic product growth rate of 2.8%, while New South Wales... Read More
  3. 14.11.2018
    14.11.2018
    by      In
    Although Australia’s small and medium-sized businesses generate employment, drive innovation and boost competition, it has always been difficult for them to get credit finance from banks, especially in the past few months, due to the royal commission into financial services, stricter loan... Read More
  4. 01.11.2018
    01.11.2018
    by      In
    The growth of the manufacturing sector continued through October 2018, with the Ai Group’s Performance of Manufacturing Index holding firm at 58.3, just a tick below September’s rating of 59. The 25th consecutive month of PMI ratings above 50 (indicating growth) comes with further encouraging... Read More