Published: Sat, September 02, 2017
Money | By Oscar Reynolds

Manufacturing sector bounces back into growth zone after GST-related contraction: PMI

Manufacturing sector bounces back into growth zone after GST-related contraction: PMI

The latest purchasing managers index (PMI), a gauge of factory conditions, came in at 51.7 in August, the National Bureau of Statistics (NBS) said, up from the 51.4 reading in July. Readings above 50 indicate expansion, while anything below 50 indicates contraction.

United Kingdom manufacturing expanded at the strongest pace in four months in August, lifted by both export orders and domestic demand.

To cope, companies stepped up the pace of hiring, which Gill said a current upswing in employment still had "far from run its course".

Rob Dobson, a director at IHS Markit, which compiles the survey, said: "At the moment, the survey data suggest that the manufacturing economy remains in good health despite Brexit uncertainty, and should help support ongoing growth in the economy in the third quarter".

Activity in the manufacturing industry in India gained momentum in August, despite government data released on Thursday showing that GDP growth slumped to a three-year low of 5.7 percent in the April-June quarter. Although the domestic market was the prime source of new contract wins, the trend in export business remained robust.

The services sector accounts for over half of China's economy, with rising wages giving Chinese consumers the opportunity to shop and travel more. "In addition, manufacturers' optimism regarding future production growth only edged up in August to its five-year average, suggesting that they will invest only cautiously in extra capacity".

Caixin noted stricter environmental policies were a key factor leading to longer delivery times, whilst inflationary pressures intensified as input costs and output charges both rose at faster rates. Only "textiles clothing furniture and other manufacturing" contracted (46.1 points) but even this sub-sector improved from previous months.

Supply shortages put upward pressure on prices and there were further reports of capacity constraints.

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