For the first time this year, manufacturing in China is back in expansionary growth. The official Purchasing Managers' Index (PMI) as released by the National Bureau of Statistics came in at 50.1 – higher than the forecasted 49.8. A figure above 50 signals the country is back in expansion, rather than the contraction that has been seen since December last year.
Prior to January 2015, the PMI had two solid years of positive 50 Index. The effect of a sub 50 index raised clear anxiety within the global market around China's growth outlook. The effect of this uncertainty resulted in orders slowing and manufacturers receiving far lower order books.
As the PMI is considered by most economists as a key indicator of the health and vitality of the Chinese economy, the positive 50 index has been received by all as sigh of relief that perhaps China's growth will continue albeit on a reduced rate.
The PMI constitutes a major driver towards assisting trading relations throughout the global economy. Across the globe, markets have reacted positively to the news with orders from Australian, UK and US markets starting to roll in again.
Whilst more measures need to be implemented by the Chinese Government to ensure growth remains on-track, this positive index signals a clear return to trading patterns.
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