On September 1, the China Manufacturing Purchasing Managers' Index (PMI), released by the National Bureau of Statistics Service Industry Research Center and the China Federation of Logistics and Purchasing, revealed that in August 2013, China's manufacturing PMI reached 51.0%, marking an increase of 0.7 percentage points from July. This was the highest level for the year so far, signaling a positive trend in the manufacturing sector.
Zhao Qinghe, a senior analyst at the National Bureau of Statistics, noted that the momentum of China's manufacturing industry has improved, and the signs of economic stabilization and recovery are becoming more evident. Sun Lijian, vice president of the School of Economics at Renmin University, also expressed optimism, stating that the rise in PMI indicates a relatively positive outlook for the later stages of the economy.
The five sub-indexes that make up the PMI were all higher than in the previous month. Notably, the new orders index rebounded for the second consecutive month, reaching 52.4%—the highest level in 16 months. This strong performance provided significant support for the overall recovery in the manufacturing PMI. Additionally, the production index rose to 52.6%, raw material inventory increased to 48.0%, employee numbers improved to 49.3%, and supplier delivery times moved up to 50.4%.
Zhang Liqun, a researcher at the State Council’s Development Research Center, pointed out that current demand for manufacturing is growing, and the economy is showing signs of improvement. He attributed part of this growth to an unexpectedly improved external environment, which positively impacted exports. Data also showed that the new export orders index in August reached 50.2%, rising 1.2 percentage points from July and marking the first time since April 2013 that it exceeded the 50% threshold.
Zhao Qinghe further emphasized that recent government policies aimed at stabilizing growth, adjusting structure, promoting reform, and benefiting people have helped stabilize public expectations and boost market confidence. With major macroeconomic indicators improving in July and the business environment gradually recovering, companies are becoming more confident about future economic development.
Industry experts believe that with ongoing urbanization projects, accelerated railway investments, and continued improvements in infrastructure and IT, the economy is likely to see further growth in the coming months. Tax cuts for small and micro enterprises are also expected to contribute to this upward trend.
However, despite the overall economic stabilization, the operational differences among businesses remain pronounced. The PMI for small enterprises stood at 49.2%, remaining below the 50% threshold for 17 consecutive months, indicating that they have yet to fully recover from their challenges.
Liu Xiahui, director of the Economic Growth Theory Office at the Chinese Academy of Social Sciences, explained that while larger and medium-sized enterprises are more responsive to economic improvements, small and micro enterprises tend to be more conservative and slower to react.
In the steel industry, the PMI for August reached 53.4%, up 0.9 percentage points from July. This reflects a positive trend of stabilization, primarily due to reduced production and improved supply-demand balance. The China Federation of Materials expects increased demand during the "Golden September and Silver October" season as the economy improves, leading to a stable development in the domestic steel market. However, rising costs continue to compress profit margins for steel companies.
It's important to note that unlike the standard 50% critical point for the manufacturing PMI, the steel industry's PMI threshold is set at 52%. Above 52%, the industry is considered to be operating well, while below that level indicates a contraction.
China Resources stated that with the recovery of the domestic economy, environmental policies, and manufacturing revival in Europe and the U.S., the steel market is currently in a favorable position. As weather conditions improve, construction activities are accelerating, and the market remains optimistic about the upcoming peak season. It is expected that steel prices will continue to rise, albeit with limited room for further increases.
Despite these positive trends, the China Federation of Materials warned that increasing steel production capacity may lead to greater supply pressure, and factors that could limit price rebounds should not be ignored. Analyst Qiu Yuecheng from Xiben Shinkansen noted that while the potential for steel price increases remains limited, a sharp decline is considered a low-probability event.
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