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China manufacturing at 12-month high, index shows

China 2009 steel output to grow despite falling demand: report
China, the world's top maker and consumer of steel, expects crude steel output in 2009 to exceed the total for last year, despite efforts to cut production amid falling demand, state media said Sunday. Crude steel output in 2009 would "surely" top the 500.48 million tonnes produced in 2008, the official Xinhua news agency said, citing Luo Bingsheng, vice chairman of the China Iron and Steel Association. In the first half of 2009, China produced 266.6 million tonnes of crude steel, up 1.23 percent over the same period last year, the agency reported. This comes despite signs that the steel sector is suffering from a fall in demand as a result of the global financial crisis. China's 71 largest steel producers saw revenue drop 28.1 percent year-on-year to 955 billion yuan (140 billion dollars) in the first half of 2009, while profits were nearly cut in half to 1.7 billion yuan, Xinhua said. The forecast for 2009 comes despite a call by the government in May for banks to curb loans to steel makers to persuade them to reduce production. The government order, which was not released publicly, also called on banks to curb or cut off loans to mills with outdated technology, state media reported in May. The World Steel Association has forecast China's steel demand is likely to fall five percent in 2009. It would be the first fall since 1995, when demand tumbled 17.2 percent after a real estate bubble burst, according to the steel association.
by Staff Writers
 Beijing (AFP) Aug 3, 2009
 Manufacturing in China hit a 12-month high in July mainly driven by domestic demand, a leading independent index showed Monday, in a further sign the economy is recovering.

The CLSA China Purchasing Managers Index, or PMI, a closely watched indicator in the world's third-largest economy, rose to 52.8 last month, the highest since July 2008, when it stood at 53.3.

A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.

Domestic demand was the principal driver of new order growth while external demand remained lacklustre in July despite rising for a second successive month, the CLSA said in a statement.

Job creation in the sector was the strongest since May 2008, it said, without giving a figure.

The independent reading confirmed official data released over the weekend suggesting that the recovery trend of the key sector is consolidating.

Figures published by the China Federation of Logistics and Purchasing on Saturday showed the sector expanded in July for the fifth consecutive month to 53.3, up from 53.2 in June.

The official index tends to be more upbeat because it attaches greater weight to state-owned enterprises, which usually follow government directions and benefit first from stimulus policies, analysts have said.

China's economy expanded by 7.9 percent in the second quarter, up from 6.1 percent in the first quarter, mainly as a result of massive government spending amid the global crisis.

Beijing announced a four-trillion-yuan (585-billion-dollar) stimulus package last year in a bid to prop up growth in the country by boosting investment in infrastructure and other government-backed projects.

The PMI sank to a record low of 38.8 in November as the global financial crisis bit, but improved continuously in the following months, moving above 50 in March.

Manufacturing accounts for more than 40 percent of the economy in China, which has been hit hard by evaporating demand for its products in key export markets such as the United States and Europe.

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