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China's Purchasing Managers' Index, or PMI, rose for the fifth straight month in April. Economists say this could show improvement in manufacturing activity, but they caution against becoming too optimistic.
Manufacturing activity in China expanded in April for the fifth straight month, according to a statement released Tuesday by the China Federation of Logistics and Purchasing and the National Bureau of Statistics.
China's Purchasing Managers' Index, or PMI, rose to 53.3 from 53.1 in March. This shows China's manufacturing activity may be improving since the last quarter, which had the slowest rate of economic growth in almost three years, at 8.1 percent.
Yet the PMI was lower than the median forecast from at least 30 polled economists. A PMI reading above 50 indicates expansion in manufacturing activity, while a reading below 50 indicates contraction.
Some analysts pointed out that China's official PMI includes mostly large, state-owned companies, and that smaller companies have been hardest hit by the global economic crisis.
Standard Chartered economist Li Wei said the gap between these big state-owned companies and smaller companies may be getting larger... saying "The figure may send a positive signal to the market, but its effect should be limited."
It's still to be seen if Premier Wen Jiabao will resume cutting interest rates over inflation concerns, or lower banks' required reserve ratios, after a two-month pause.
