China July factory PMI quickens on rising new orders

BEIJING (REUTERS) - Growth in China's vast factory sector picked up slightly in July from June thanks to a rise in new orders, an official survey showed on Thursday, offering a sign the world's second-largest economy could regain some strength in the second half of 2013.

The official purchasing managers' index (PMI), released by the National Bureau of Statistics, rose to 50.3 in July from 50.1 in June. The figure was higher than the market expectation of 49.9.

A reading above 50 indicates expanding activity while a figure below that level points to a contraction.

A sub-index measuring new orders edged up to 50.6 in July from 50.4 in June, indicating stronger demand for Chinese goods.

"This may well be the beginning of the end of negative data surprises and can start a turnaround of sentiment and expectations for Chinese growth," said Dariusz Kowalczyk, senior economist and strategist, Asia ex-Japan, at Credit Agricole CIB.

The PMI figure seems to offer a silver lining for the economy that has slowed in nine out of the past 10 quarters, with annual GDP growth dipping to 7.5 percent in April to June from 7.7 percent in the first quarter.

Beijing has targeted 2013 growth of 7.5 percent, a far cry from the double-digit levels seen in most of the past three decades as it tries to wean the economy off dependence on exports and investment and towards one driven by domestic consumption.

China's politburo, the country's top decision-making body, has pledged to fine-tune macro policies to maintain a steady economic growth in the second half while pressing ahead with reforms and restructuring.

Lacklustre economic figures for the second quarter had raised doubts over whether China could still meet its annual economic growth target this year, though top officials said they are confident to achieve that goal.

Despite the pick-up in the PMI figure, some economists said China's growth prospects for the rest of the year could stay under pressure if global demand remains weak and the expansion of domestic consumption is not quick enough to take up the baton of exports.

The official PMI, which focuses on big and state-owned firms, has been generally rosier than a private survey that targets small and private companies.

The latest benchmark Reuters poll showed analysts forecast full-year GDP growth slowing to 7.4 percent in the third quarter before stablising in the final quarter of 2013. Full-year growth is forecast to be 7.5 percent.