India’s manufacturing sector grew in April for the first time in five months, meanwhile, the purchasing managers’ index for Chinese manufacturing rose to 50.1 in April up from 44.8 a month earlier.
India’s manufacturing sector grew in April for the first time in five months, spurring hopes of an end to falling growth estimates and contracting exports.
Meanwhile, the purchasing managers’ index for Chinese manufacturing published by CLSA, the Hong Kong-based brokerage, rose to 50.1 in April up from 44.8 a month earlier, signalling an expansion in factory output for the first time in nine months.
Asian stock markets jumped sharply following the news. Hong Kong’s benchmark Hang Seng index rose 5.5 per cent to close above 16,000 for the first time in seven months, while the Bombay Stock Exchange’s Sensex index rose 6.2 per cent to 12,113, climbing above 12,000 points for the first time since early October. Shares in Shanghai rose 3.3 per cent, reaching a nine-month closing high.
Signs of ”green shoots” in India came in the form of an ABN-Amro Bank purchasing managers’ index based on a survey of 500 companies. The index rose to 53.3 in April from 49.5 a month earlier, buoyed by higher demand for goods from Indian factories and stock building.
The reading is the highest since October and reflects a steady rise in orders since the global economic downturn underminedthe index at the end of last year.
The PMI figures will bring relief to India’s industrialists after the country’s exports fell 33 per cent in March to $11.5bn. Gems and jewellery, pharmaceuticals and the car industry have been some of the industries most affected by the global slowdown.
But while concerns about merchandise trade have deepened, some analysts detect an improving outlook for India’s services sector.
”Trade in certain services is weathering the crisis much better than goods trade,” said Aaditya Mattoo, at the World Bank in -Washington. ”Trade in crisis-affected financial services and goods-related transport services has indeed shrunk. But trade in business, professional and technical services - which account for nearly a quarter of India’s exports - is weathering the current crisis much better than goods trade.”
He said that a ”relatively positive outlook” was supported by expectations that employment in the export-oriented information technology and business process outsourcing services would grow by about 5 per cent, or 100,000 jobs, this year.
Signs of greater optimism were also reflected in the Federation of Indian Chambers of Commerce and Industry’s business confidence survey for the quarter to the end of March. The proportion of companies saying that performance had weakened over the past six months fell from 81 per cent in the previous quarter to 55 per cent in the period under review.
The CLSA survey confirmed evidence from the China Federation of Logistics and Purchasing last week that the official index had risen to 53.5, its second consecutive positive reading.
The output and new orders components showed particularly strong growth in the CLSA index, in which a reading above 50 indicates an increase.
”China’s government has been extremely successful in stimulating investment,” said Eric Fishwick, head of economic research at CLSA.
He cautioned that the export orders index, which had seen a rebound, was set to soften again, but said there were hopes stronger domestic demand, driven by government spending, would make up for that.