China’s Manufacturing PMI Indicated Stronger Business Climate

China’s manufacturing activity improved sharply in August 2017. According to a report by the National Bureau of Statistics of China, China’s final manufacturing PMI stood at 51.7 in August 2017 as compared to 51.4 in July. The PMI figure beat the preliminary market expectations of 51.3.

The strong performance of China’s manufacturing PMI was mainly due to the following factors:

• Production volume and output rose at a higher rate in August 2017. Output stood at 54.1 in August 2017 as compared to 53.5 in July.
• The new business orders and export orders also showed strong improvements in August 2017. New business orders rose to 53.1 in August from 52.8 in July 2017.
• Employment fell marginally in August 2017 as manufacturers became cautious.

The iShares China Large-Cap ETF (FXI), which tracks the performance of China’s (YINN) (ASHR) large-cap stocks, rose nearly 4% in August 2017. China’s economy regained strength after its policymakers adopted various steps to control its debt level.

The rise in domestic demand (MCHI) is improving the purchasing activity of consumers. The higher purchasing activity is improving the demand outlook of the economy.

In the next part of this series, we’ll analyze the final services PMI for China in August 2017.