HSBC: Chinese manufacturing 'improving'

Chinese manufacturing output slowed less this month than in June, it has been revealed.

According to a preliminary survey by HSBC, the Purchasing Managers' Index (PMI) for the world's second-largest economy rose to 49.5 per cent in July.

This is a five-month high for the PMI and is more than one point on June, when it posted 48.2.

These indices work in such a way that any reading of 50 or above indicates growth, so the Chinese industry is close to achieving this if the trend continues.

Investor fears of a sharp slowdown in the Asian superpower's economy have been rife of late, with the nation growing by an annual rate of 7.6 per cent in the second quarter of 2012 - the slowest pace in three years.

Some analysts have claimed this latest round of data is indicative of recent measures put into action by the government in Beijing to boost growth have started to work and the country may rebound in the near-term.

Among the steps taken by policymakers is the decision to lower interest rates, which serve to benefit both domestic and export markets.

The Chinese central bank has slashed its key interest rates twice in as many months and has also lowered the amount of money banks need to have in reserve to boost lending.

China's manufacturing sector has been particularly affected by the financial turmoil in the eurozone and the US, as slower growth and debt woes in these regions have seen the industry's output grow increasingly sluggish due to a drying up of demand.

At close this morning (July 24th), the Shanghai SSE Composite was 0.2 per cent higher to an index value of 2146.5 points and the SSE SE 50 made similar gains to 1632.9 points.

By contrast, the Hong Kong Hang Seng finished down 0.7 per cent to 18903.2 points.