China Factory Sector Likely Accelerating in July

Activity in China’s vast factory sector likely expanded at the fastest pace in eight months in July, a Reuters poll showed on Wednesday, adding to evidence that the economy is regaining momentum after a burst of government stimulus measures.

China’s official manufacturing purchasing managers’ index (PMI) is expected to rise to 51.4 in July, up from June’s 51, according to the median forecast of 24 economists in a poll.

A reading above 50 indicates an expansion in activity while one below that level points to a contraction.

 
The expected improvement in manufacturing is in line with signs of a pick-up in broader economic growth, which quickened to 7.5 percent in the second quarter from a 18-month low of 7.4 percent between January and March.

“With the effect of mini-stimulus measures gradually filtering through, the PMI data could pick up further in the coming months, supported by reviving domestic production and improving exports,” said Wen Bin, economist at Minsheng Bank in Beijing.

A preliminary PMI survey released last week by HSBC and Markit showed that rising new orders have lifted the growth of factory sector activity to a 18-month high in July.

Some economists say the economic recovery still hinges on the magnitude of Beijing’s pro-growth steps and whether the government can successfully curb the downside risks stemming from the cooling property sector.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza