China’s manufacturing slowdown stabilized in August in another possible sign the world’s second-largest economy is improving, a new HSBC Corp. survey suggests.
According to HSBC Corp., the preliminary version of its monthly purchasing managers index rose to 50.1 from July’s 47.7 on a 100-point scale. Numbers above 50 indicate an expansion in activity.
The modest improvement is a positive sign for Chinese leaders who are trying to reverse a slowdown that dragged economic growth to a two-decade low of 7.5 per cent in the latest quarter.
New output and new orders increased, HSBC said, while export orders and employment continued to decline.
“China’s manufacturing growth has started to stabilize on the back of modest improvements of new business and output,” said HSBC economist Hongbin Qu in a statement. He said China might see “upside surprises” in growth in coming months.
According to the survey, many Chinese leaders are comfortable with slower growth and will avoid an across-the-board stimulus. But they have announced measures to perk up individual areas of the economy including higher spending on railway construction and a tax cut for small businesses.
China’s slowdown was largely self-imposed. Beijing clamped down on bank lending and investment as part of efforts to nurture more self-sustaining growth based on domestic consumption and reduce reliance on trade.