China Official PMI Preview: Manufacturing PMI For August Could Show Sector Growth Stabilizing

on August 27 2013 6:02 AM

China’s National Bureau of Statistics, or NBS, will release the official purchasing managers’ index, or PMI, on Aug. 31 at 9 p.m. EDT, and it is expected to show a reading of 50.6 -- meaning the country's manufacturing sector clocked its fastest growth in three months -- up from 50.3 in July, according to the median forecast in a Reuters poll of 12 economists.

The manufacturing sector in the world's second-largest economy remains under close watch, as the government has accelerated efforts to resuscitate growth in a slowing economy by boosting domestic demand.

“PMI data for August could further confirm a stabilizing trend of the economy, which is mainly underpinned by infrastructure and property investment,” Nie Wen, an analyst at Hwabao Trust in Shanghai, told Reuters.

According to a HSBC-Markit survey, which surveys a different sample of companies in China’s manufacturing sector, the PMI registered a reading of 47.7 in July to show that the sector contracted for three straight months. A reading above 50 indicates expansion while a reading below 50 shows contraction.

In June, China had suspended the release of its official PMI data, citing a lack of time to analyze the large volume of responses to the survey, which collects data from more than 3,000 companies across about 30 industries. However, on Monday, China admitted that there may have been certain inaccuracies in the official manufacturing activity figures released by the NBS in the past.

“We can’t ensure all industry-specific data can reach accuracy requirements,” Sheng Laiyun, a statistics agency official, said at a briefing in Beijing, Bloomberg reported. “Samples in some industries are very small, and accidental changes may affect overall data quality -- we were concerned that some of the numbers may affect related investors and users.”

Economists who spoke to Bloomberg noted that in the absence of industry-specific data, “the credibility of China’s headline PMI indicator is undermined.”

HSBC’s preliminary survey of purchasing managers, or flash PMI, which was published on Thursday, found China’s manufacturing activity expanded to a reading of 50.1 in August -- its highest in four months and up from 47.7 in July. The consensus on HSBC's final manufacturing PMI - due at 9:45 p.m. EDT on Sept. 1 -- is in line with the readings of the flash PMI.

A forecast published by Trading Economics ahead of the Chinese government’s official data on the manufacturing sector on Saturday, showed factory activity is expected to only marginally improve to 50.38 in August compared to 50.3 in July. 

The official data, which surveys state-supported companies, has traditionally showed more positive trends and an expansion in the manufacturing sector, as compared to private surveys such as the one released by HSBC-Markit.

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