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Experts say the rise of the PMI, shows that China's macro economic conditions are steady. And that economic growth isn't likely to decelerate sharply.
Analysts say the index jumped mainly due to the rising demand. Key sub-indexes such as new orders and new export orders both increased.
Cai Jin, Vice President of China Federation of Logistic & Purchasing said "The rebound of the index firstly indicates that China's economic condition is steady. The market demand is steady, especially because the new orders index rose a lot from the previous month. It also shows that the supply and demand is becoming more balanced."
Meanwhile, the government's policies that encouraged energy saving and overproduction elimination have also cut total supply. Therefore, balanced the supply and demand in the market.
However, the input prices jumped by more than 60 percent in August from July, exceeding earlier expectations.
Cai Jin said "Several factors pushed up the prices. First, agricultural products became more expensive due to natural disasters. Another reason is that input prices rose as the cost of some commodities in the International market increased. "
The rise of the PMI seems to have alleviated market concerns about a sharp slowdown in the second half of this year.
Zhang Liqun, Researcher of Development Research Center of the State Council said "The change in PMI is uncertain. We can just say that August's data has not shown a slowdown. Taking other factors into consideration, I'd like to say a sharp slowdown is not likely to occur. But we also need further observation to make a conclusion."
Analysts also say the increase in input prices could create pressure for business.
- China August PMI index rebounds 2010-09-01