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CLSA China PMI Report on Manufacturing


Key points:

• Growth of production signalled.
• April data pointed to a modest gain in new business.
• Job creation recorded for the first time since last July.

Historical overview:



The headline CLSA China Manufacturing PMI™ rose sharply to 50.1 in April, from 44.8 in the previous month, to signal an expansion of the Chinese manufacturing sector for the first time in nine months. The upward trend observed in the index since posting a survey low last November, suggests that the sector is showing signs of stabilisation.

April data pointed to the first rise in production levels at Chinese manufacturers since last July. Where firms signalled an increase in output at their plants, this was commonly attributed to modest gains in new business.

Growth of new orders was signalled by April’s survey, following eight consecutive months in which order books have deteriorated. Chinese manufacturers widely reported that improved domestic demand had led sales higher in April. Despite an overall gain in new business, Chinese manufacturers pointed to a modest decline in export sales in April. That said, the latest drop in foreign orders was the least marked for eight months, with panellists commenting that improved demand from some external sources had acted to limit the rate of decline.

A modest increase in staff numbers at Chinese manufacturers was recorded in April, which was the first in nine months. Employment growth largely reflected an improvement in order books and higher output requirements.

Prices charged by Chinese manufacturers for their finished goods fell further in April, extending the current period of decline to eight successive months. Anecdotal evidence frequently linked the marked drop in output charges to competitive pressures and falling input costs.

Average cost burdens faced by Chinese manufacturers declined for the seventh month running in April. The latest reduction was still sharp but much weaker than the rapid declines recorded towards the end of 2008.


Commenting on the China Manufacturing PMI survey, Eric Fishwick, Head of Economic Research at CLSA said:

"China's government has been extremely successful in stimulating investment and, combined with a sharp improvement in export orders, this has pushed the PMI back into positive territory in April. The Export Orders Index should soften again in the coming months as, inventories having been brought under control, orders track final demand overseas. However, we hope that firmer domestic demand, as government spending gains traction, will keep the PMI above 50 in months to come."



About CLSA Asia-Pacific Markets

CLSA Asia-Pacific Markets is Asia’s leading, independent brokerage and investment group. The company provides investment banking, capital markets, equity broking and asset management services to global corporate and institutional clients.

Founded in 1986 and headquartered in Hong Kong, CLSA’s major shareholder is France’s Credit Agricole, which merged with Credit Lyonnais in 2003 to form the eighth-largest bank in the world by Tier-One capital and the sixth-largest bank by assets.

CLSA has had a longstanding commitment to China with an active presence there since 1990 and in 2003 China Euro Securities Limited (CESL), the first Sino-foreign joint venture received a licence to underwrite A and B share and Renminbi denominated bond offerings in China’s domestic securities markets, was established between CLSA and Fortune Securities Co Ltd. CESL was the first JV to be created under the new regulations introduced by the China Securities Regulatory Commission in 2002 following China’s accession to the WTO.

In June 2008, CESL was again the first to be granted a Securities Broking Licence (Restricted to Yangtze River Delta Area) and a Securities Investment Consultancy Licence by the China Securities Regulatory Commission. These two licences permit CESL to commence a fullservice institutional research, sales and broking business for domestic and international clients who wish to buy and sell A shares trading on the Shanghai and Shenzhen stock exchanges.

CLSA’s China research team is consistently ranked for their in-depth coverage of over 115 listed mainland Chinese companies. CLSA has completed over 170 China-related equity capital markets fund raising in the international capital markets since 2002.

For further information, please contact:

Simone Wheeler, Head of Communications
Telephone +852-2600-8888
Email simone.wheeler@clsa.com