China’s PMI Posted Gains in February
An improved exports scenario in February posed good news for China and the rest of its trading partners, expanding for the first time in four months, with the official purchasing managers' index (PMI) of the world's second-largest economy reaching 51.0, well above expectations of the global market.
China's February PMI, connoting an improved manufacturing activity for a third straight month, was also the highest PMI since 51.2 in Sept, China's National Bureau of Statistics said in a statement on Thursday. The Asian tiger registered a 50.5 PMI in January.
A PMI above 50 signals expansion, while below 50 points to contraction.
"The February PMI continued to pick up, further confirming a trend that the economy is stabilising," Zhang Liqun, a researcher with the Development Research Centre of the State Council, said in the official statement.
However, analysts belied the authenticity of the figures, saying these may have been misleading on the fact that the week-long Chinese New Year holiday fell early in January this year, translating to more work days in February.
A separate manufacturing index by HSBC Holdings Plc and Markit Economics also released Thursday showed China's PMI grew to only 49.6 in February from 48.8 the previous month, its third straight improvement and the highest since October.
"Different from January, last month's expansion in the manufacturing sector is mainly driven by heavy industries. But the export and investment demand is expected to ease in the coming months, albeit at a slower pace. Input price is accelerating evidently, a reflection of rising imported inflation," Zhang said.
Consequently, Australia and New Zealand, two of China's major trading partners, instantly experienced a domino effect on China's good news, with the Australian dollar and kiwi immediately gaining against the U.S. dollar.
As of 3:21 p.m. in Sydney, the Australian dollar hiked 0.2 per cent to $1.0754, while New Zealand kiwi grew 0.2 per cent to 83.55 U.S. cents, Bloomberg News reported. The 10-year bond yield of Australia likewise grew 0.1 percentage point, or 10 basis points, to 4.07 per cent. Same with New Zealand's two-year swap rate which hiked two basis point to 3.095 per cent.
"The two South Pacific nations' currencies are a little bit firmer," Sue Trinh, an analyst with Royal Bank of Canada, said in Bloomberg News. "The stabilization of the numbers would support the idea that China's in for a soft economic landing."
China is Australia's biggest trading partner and New Zealand's second-largest export destination.