Wednesday, December 1, 2010

China Manufacturing PMI at 7-Month High (Video) "Strongest rise in overall new orders since March"


China Manufacturing PMI Increases to 55.3

China Manufacturing Expands in November
Factories Ramp Up Production

China Manufacturing The HSBC China Manufacturing PMI, compiled by Markit, increased to expanded in November to 55.3 from 54.8 (+0.5) in October. This was one of the larger monthly increases since the PMI was started in April 2004. Key points noted in the report:
* Strongest rise in overall new orders since March.
* Supply chain bottlenecks widespread in November.
* Input price inflation the fastest since July 2008; output charges raised at rapid rate.
Commenting on the China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "The stronger reading of the November Manufacturing PMI, especially the faster rise in input prices, against the backdrop of the Fed's QE2, is likely to translate into concern about inflation. We expect Beijing to step up its efforts of quantitative tightening and to hike interest rates by 25bp in the coming months to check inflation."

(Reuters) "Input Prices Soar in China" December 01 - China's PMI hits 7-month high as factories ramped up production in November, but input prices post biggest gain, showing further inflationary pressures ahead.

About the PMI

The HSBC China Report on Manufacturing is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 manufacturing companies. The panel is stratified geographically and by Standard Industrial Classification (SIC) group, based on regional and industry contribution to Chinese Industrial Production. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’.

The Purchasing Managers’ Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease
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