The official purchasing managers index (PMI) from Beijing indicates that China’s factory sector not only grew in August, but accelerated slightly.
The PMI came in at 50.9, a little above the 50.7 July reading and roughly within the 51.0 to 51.2 range that economists were steeled to expect.
Last week’s unofficial “flash” PMI from HSBC also picked up a bit, but at 49.8 indicated that business for China’s manufacturers was still experiencing a slight decline.
In general, a PMI reading of 50 or more reflects an expansive manufacturing environment, while a lower number is often an omen of slowing activity or an outright contraction.
Traders seem relatively satisfied with the number. Stocks in both Hong Kong (EWH) and Taiwan (EWT) opened higher before the data release, then added to their gains afterward.
Shanghai shares also opened higher. Should they keep their gains, it could well translate into a follow-up bounce for Chinese ETFs like FXI in the morning:
One ominous note: the key input price subindex, which measures input cost inflation for Chinese factories, climbed to 57.2 from 56.3.
As it is, Premier Wen Jiabao warns that he does not see any signs that inflation in the country is easing and that, as a result, Beijing will “try to bring about a bigger drop” in price increases in the remainder of the year.